Northwest Airlines Dividend Miles members who are also US Bank WorldPerks credit cardmembers will soon receive a new credit card to replace their co-branded WorldPerks card. US Bank will be offering a new travel rewards card called FlexPerks Travel Rewards Visa to replace the Dividend Miles credit card. Cardmembers will earn FlexPoints that can be redeemed for flights on any airline, a statement credit, merchandise or other awards. We spoke with Bob Daly, Vice President, Retail Payment Solutions at U.S. Bank, about the card.
Why did US Bank decide to offer a travel rewards card instead of a cash-back or mileage-based card?
Actually, TravelPerks cardholders can redeem for a statement credit as well, so it can be used essentially as a cash-back product, along with merchandise, certificates and travel redemptions. Therein lies the rationale behind the name FlexPerks. Flexibility–do what you want to do, travel when you want to travel, redeem for whatever you want to redeem for.
Can you give us some background information about the card–how it works and how members earn points and what they can redeem them for?
The reason we are able to put forth such a very rich value proposition is that we are taking revenue that we would have otherwise shared with the airline and invested it in enabling people to get on planes when they want to or redeem for other things. That is the foundation for the product itself. After it was clear our 15-year relationship with Northwest Airlines was coming to an end, it gave us an opportunity to take a step back and talk to customers. We have a lot of history with our customers –15 years worth of data of what they liked and didn’t like about the product. We knew that over the years there has been a growing frustration with the ability to redeem miles and get seats on planes. We set out to alleviate that issue.
If you look at the industry data, the growth of the number of miles in the marketplace vs. the growth of the number of seats in the marketplace–it’s just not sustainable. We said, hey, let’s fix that. On the earn side, our cardholders earn one FlexPoint for each dollar spent and each month they will earn two FlexPoints for each dollar spent on gas, grocery or airline ticket purchases. They don’t have to do anything–the cardholder will receive double points in the category with the highest spend in that billing cycle. The benefits vary a little bit based on the card type. Business card members can earn double points for business supplies if they spend the most amount of money in that category.
On the earn side, you can earn points more quickly than you can with many of the other co-brand products available. On the redemption side, airline ticket redemptions begin at 20,000 points for a ticket valued at up to $400. Our point of entry is lower than the airline co-brands and lower than many of the other financial institution products. Our $400 threshold is also higher than many of the other thresholds. Because of our long history with our cardholders, we know what the average ticket price is and $400 will enable the vast majority of people to get a ticket when they want to go, the airline they want to fly on–end of frustration. We are also giving cardholders up to a $20 allowance with each award ticket to pay to check a bag, visit the lounge or buy food or something to drink on the plane. We’ve also heard cardholders express concern about annual fees. Our products waive the fee for the first year and it’s only $49 thereafter. And if you spend $24,000 per year on the card, your annual fee is waived.
When will the merchandise and other awards be available online?
As soon as people begin to convert their products. Many of them will be offered substantial bonus opportunities right out of the gate for their spending and registering the card. In theory, someone can make purchases in the first few days and they’ll be able to redeem immediately–for flights, merchandise, statement credits, etc.
Can you share what some of the merchandise awards are going to be?
A wide spectrum. Household products, electronics, gift cards–there will be no shortage of options. At last count there were over 300 and they will be across a broad spectrum.
Why did you decide to offer up to a $20 travel allowance?
To enhance the travel experience. We’re paying attention to our cardholders and what we’re hearing in the marketplace. “I used to not have to pay a fee for food on the plane, I used to not have to pay a fee to check a bag.” And we offered the allowance to help alleviate these nuisance fees and to enhance the travel experience.
When will WorldPerks members receive their new FlexPerks credit cards?
Their upgrades will begin in the early part of May. We hope they’ll be excited. The feedback we’ve received so far has been extraordinarily positive. We acknowledge that a likely competitor for this card will be the Delta SkyMiles American Express. When we do a side-by-side comparison of the core features of our product and their product, ours stacks up very well on the features that cardholders have indicated are important to them. We couldn’t be more pleased with what we’ve architected and we’re looking forward to getting started. It’s just around the corner.