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You spend $400.00-$500.00 to acquire a new credit card customer. They activate the card, use it once for the signup bonus, then it goes to the back of their wallet. Two weeks later, they're dormant—the card is active, but they’re not spending on it.

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That's not a customer acquisition problem. That's a $400.00 - $500.00 loss you're about to repeat with the next customer.

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The numbers tell a sobering story. The average American holds 7.1 credit cards but only 3.7 are actually active—a mere 52% activity rate. This massive inactive majority includes both cards that were never activated after issuance and cards that initially saw use but went dormant. Among cardholders, 23% of credit card accounts show no activity whatsoever.  That means nearly half of all cards in circulation generate no revenue—leaving issuers with massive waste in customer acquisition costs.

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And even among those who remain active, there's a massive disparity in value. Nearly 8 in 10 cardholders have multiple cards, but they play favorites. Consumers spend nearly $2,000 per month on their top-of-wallet card, compared to just over $1,200 on their second choice card. That's a 67% spending premium for securing the primary position in someone's wallet.

For prepaid cards and payroll cards, you have even less time—about two weeks to get that cardholder engaged before they transfer their money off the card and never come back. For credit cards, you might have three to six months. Either way, the clock is ticking from the moment they activate.

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Retention Without Engagement Is Just Expensive

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Take my own wallet. I've been paying $750 annually for a premium credit card for years. That card sits behind my go-to card every time I open my wallet. I only pull it out when my primary card isn't accepted, which is rare. After all this time as a customer, the issuer has done nothing to change that behavior. No personalized offers based on where I actually spend. No incentives that acknowledge how I use cards versus how they want me to use cards.

So, I'm about to cancel it.

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That's the real cost of treating every cardholder the same. The issuer retained me as a customer—I've been paying that fee for years. But they never engaged me. And now they're losing both the annual fee and whatever interchange revenue they could have earned if they'd made that card relevant to my actual life.

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When do you hear from your card issuer? When your statement arrives. When there's fraud. When you're late on a payment. Every touchpoint is administrative or negative. There's no surprise, no delight, no reason to feel valued.  

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What if you could turn those rare touchpoints into moments of surprise and delight—a birthday credit, an anniversary reward, or just a thank you for being a customer? In a market where customer loyalty is already fragile, you can't afford to only communicate when something's wrong.

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Points Programs Work. But Not for Everyone.

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Points and miles programs are highly effective for the right customer segment. Frequent travelers, deal seekers, and people who like accumulating rewards for future redemption—these cardholders engage well with traditional loyalty programs.  

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But not everyone fits that profile. The shift accelerated after COVID. Consumers now expect self-service, personalization, and flexibility. The line between business and personal spending has blurred as remote work replaced frequent business travel. The old playbook doesn't match current behavior.  

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A growing segment wants something different: instant gratification. They want to see value today, not accumulate it for someday. They're not interested in clicking through card-linked offers or waiting months to redeem points. It’s like clipping coupons. It’s cumbersome.  

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For these cardholders, traditional programs don't drive the initial activation and engagement issuers need. Points work beautifully once someone is already using the card regularly—but they don't solve the cold-start problem of getting a new cardholder to use the card in the first place.

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What Works for the Instant Gratification Segment

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Here's what engaging a new cardholder actually looks like:

Sarah activates her new card and immediately gets a text: You have a $25 grocery credit, a $10 restaurant credit, and a $25 fuel credit. They're good for two weeks at stores she already shops at.

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Not points to accumulate over time. Immediate value she can use today at places she already shops.

The same approach works throughout the customer journey. An existing cardholder who typically uses the card only for gas receives a targeted grocery credit to expand spending categories and move toward top of wallet. A customer trending toward dormancy gets a birthday credit as a surprise-and-delight moment that brings them back into active use. This is what we call controlled spend incentives—specifically, digital credits. They work alongside traditional points programs, targeting a different moment in the customer lifecycle and a different type of cardholder behavior. While points programs excel at rewarding ongoing loyalty and accumulated spend, digital credits drive utilization and active engagement throughout the customer journey—from first use to top of wallet status.  

The issuer sets all the guardrails: what the reward is, how much it's worth, where it can be used, and how long it's valid. It's a pay-for-performance model tied directly to outcomes like activation, spend lift, or retention.

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Why This Matters Beyond Credit Cards

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This isn't just a credit card problem. Every payment account faces the same challenge: how do you get people to actually use it?

Payroll card providers watch 90% of deposited funds get transferred off the card immediately. The cardholder is required by their employer to receive payment this way, but they don't want to keep money there. They move it to their "real" bank account. Even digital wallets like Venmo and Cash App face similar challenges—how do you keep money in the account and drive transactions, rather than watching users immediately transfer funds out?

The common thread: retention means nothing if customers aren't actively using the account. And customers won't use it without a reason that matters to them personally, delivered at the right moment.

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How to Drive Card Utilization and Engagement

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You've built customer profiles for your cards—demographics, spend patterns, credit tiers. You know which cardholders you're targeting and what behaviors you want to drive. The question is how to use different tools for different segments and lifecycle stages. Major card processors are already adopting this approach—adding card utilization services alongside existing loyalty point redemption programs to address different moments in the customer journey.

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For engaged cardholders who use the card frequently and have accumulated points, traditional redemption programs work well. That's the segment that responds to miles, cashback tiers, and long-term reward structures.

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But for new cardholders in their first weeks, or dormant customers trending toward inactivity, you need a different approach. If you've issued a Visa card to someone under 35 and you want them to use it for everyday grocery spend, give them a grocery credit in the first week after activation. Make it time-bound so there's urgency. Track what happens: Did they use it? How much did they spend? Did they come back the following week?

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And here's why it works financially: Issuers can use their payment data to see that a $25 grocery incentive can drive an average of $150 in spend. They just turned a $25 investment into interchange fees, interest on the carried balance, and an active customer who's now using the card regularly. That's measurable ROI, not hope that points will eventually drive behavior.

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This applies across the customer lifecycle. New cardholders need incentives that drive initial spending. Engaged cardholders who've accumulated points benefit from easy redemption programs. Dormant cardholders trending toward inactivity need a different nudge—maybe a birthday credit or a targeted offer based on their past spending.

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The key is recognizing that different customer segments and lifecycle stages require different engagement strategies. Digital credits help drive cardholder engagement across the lifecycle: getting new customers to start using the card, keeping existing cardholders actively spending, moving cards toward top of wallet, and re-engaging those trending toward dormancy.  Points programs handle one part of this well. Instant, controlled rewards handle another. Together, they cover more of your cardholder base than either approach could alone.

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Beyond Card Utilization: Other Applications

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Card utilization is the primary use case, but the same controlled spend approach solves similar problems across other industries:

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Service recovery: When a wireless carrier has a service outage or a delayed device trade-in, send a digital credit instead of a generic apology. It's faster than cutting a check, more personal than statement credit, and it keeps the customer engaged and in your ecosystem.

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Employee incentives and commissions: Prepaid wireless distributors pay thousands of daily commissions to retail stores selling top-ups. Moving those payments from checks to instant digital credits speeds up the process and reduces friction.

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The pattern is the same: reduced waste, real-time data, and measurable outcomes.

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What Happens If You Don't Expand Your Approach

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The market is too competitive to rely on a single engagement strategy. If your only tool is points and miles, you're leaving a segment of cardholders—and their spending potential—on the table. Not because points don't work, but because they don't work for everyone at every stage.

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Acquisition costs aren’t getting any cheaper. And the cost of losing a customer isn't just the revenue you miss—it's starting the cycle over with steep reacquisition and marketing costs.

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The issuers who figure this out will stay top of wallet. They'll build stronger relationships by meeting different cardholders where they are, with rewards that match what each segment actually wants. The ones who rely solely on traditional programs will keep watching new cards go dormant in the first few weeks, wondering why retention isn't translating to engagement.

The future of loyalty isn't one-size-fits-all. It's segmented, with different tools for different customers: points for those who value accumulation, instant rewards for those who want immediate gratification, and the flexibility to use both strategically across the customer lifecycle.