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With Canada’s economy in recession, there’s room for little doubt that COVID-19 and its aftermath will continue to impact our lives for some time.

But did the pandemic change people’s preferences when it comes to their credit cards?

And if their preferences did change, how so?

Let’s answer these questions with this study that includes over 181,000 data points from February 2019 to May 2020.

And on the flipside, did the banks adapt their approach to approving people for credit cards?

Let’s answer our first question:

Is there a change in people’s credit card preferences since COVID-19?

Surprisingly, our study shows consumer preferences have, by and large, stayed relatively steady ‒ except when it comes to their choice of credit card rewards.

Shift in consumer preferences in credit cards

We expected to see a larger shift towards cards with easy approval, low fees, and low interest rates. Indeed our data shows there is an increased demand towards cards with easy approval and low fees ‒ but not quite as significant as the clear-cut shift towards cash rewards.

Consumer credit card preferences before COVID-19

Before COVID-19, the most common credit card features consistently identified as must-haves are these 3:

Combined, these 3 features account for 43% frequency of occurrence (the number of times these features were selected) compared to 17% of the 3 least selected features.

Consumer preferences prior to COVID-19

We should note that cash rewards is the fourth most selected feature with 12% frequency of occurrence.

3 noteworthy findings after COVID-19

Now to our next question: How did people’s preferences shift exactly?

Once COVID-19 took hold, the most significant shift in preference we’ve seen is the increased demand for cash back rewards ‒ and a direct negative impact on travel rewards. Travel was selected over 20% less, with cash being selected almost 20% more.

1. Cash is king

With travel restrictions still in place, it’s not hard to see why people are more interested in cash back credit cards. You’ll predictably pocket your cash rewards at least once per year, and can use them to help pay for day-to-day expenses.

2. There is an increased preference for low fee credit cards with easy approval

There’s an increased demand for credit cards that offer easier approval ‒ and a slight increase in interest for credit cards with low fees. With massive layoffs and Canada’s economy in severe recession, these shifts come as no surprise.

As you’ll see in our breakdown later, there has always been a heavy demand for low fee cards. And so, we’re only seeing a “slight increase” of interest towards low fees after the pandemic in part because the demand has been high all along.

We did expect to see a much steeper increase in demand for cards with easy approval. Given the huge profit declines reported by the banks, their response was to tighten approvals for new credit. And if the bank’s response is to tighten approval, then we still anticipate consumers will respond by favouring cards with easy approval thresholds and we’ll likely see that in the next few months. (Read more about approvals below.)

3. The demand for low interest credit cards remains consistent

Given the current recession, when saving money is top of mind, it’s surprising that we didn’t see an increased demand for low interest cards. These 2 reasons why come to mind:

  • Sampling bias. Consumers using our site tend to be more savvy with their money, not carry credit card balance, and are most concerned with boosting rewards.
  • Smaller data set. We only have 2 full months of post COVID-19 data (April to May 2020) compared to 14 months pre-pandemic, which may not fully account for the shift in consumer preferences as the current economic realities begin to hit home. Changes in consumer sentiment often take time to percolate.

Let’s look at these trends in detail, grouping the 8 credit card features mentioned above into these 4 categories:

  • Rewards ‒ cash back cards vs. travel cards
  • Fees ‒ low fee cards vs. premium cards with extensive insurance
  • Savings ‒ low interest rate cards vs. cards with lots of extra perks
  • Convenience ‒ cards with easy approval vs. cards that are widely accepted

1. Rewards: Cash vs. Travel

When it comes to choosing rewards, around here, travel has historically trumped cash. And that’s no stunning revelation. Travel rewards generally have a higher value and that bonus fun factor.

Cash vs travel slider setting

That said, the gap isn’t quite as large as you might think. As you can see above, travel had a sizable lead over cash back in February 2019, but the gap closed and travel was only selected slightly more over cash that following summer.

Then we reach March 2020. The recent pandemic has seen a large increase in cash over travel rewards – which is not surprising. Our once globe-trotting world is virtually at a standstill, and getting more immediate savings over waiting to use travel rewards has a lot more appeal right now.

Related: The Truth About Cash Back Vs. Travel Rewards

2. Fees: Low fees vs. premium cards with solid insurance

When it comes to deciding between insurance coverage or low fees, there’s never been a contest.

Insurance vs low fees slider setting

People have always preferred low fees more often than comprehensive insurance which is a feature of most premium cards that typically come with an annual fee. The pandemic has seen a slight uptick in selecting low fees, but it’s not an extreme difference.

3. Savings: Low interest rates vs. Exclusive perks

Here, the gap is even wider. Most people are more interested in extra credit card perks than in saving on credit card interest.

Taking advantage of credit card perks ‒ first year free, free supplementary cards, roadside assistance, plus 13 more listed here ‒ does save you money. Though again, our sampling bias could be at play here. Would the general population choose perks over low interest rates? The final verdict is still out.

Low interest vs perks slider

4. Convenience: Approval vs. Acceptance

Widespread retail acceptance is more frequently selected than cards with easy approval. Though looking at the graph, including the middle section which accounts for a neutral choice, the gap between the 3 is not quite significant.

Acceptance vs approval slider

Trends in credit card applications and approvals

Given the well-documented profit drops by the banks, how did that impact their approval rates?

Overall, we’ve seen a decrease in the number of successful applications for many of our top credit cards.

Here are the approval rates going back to January for some top credit cards, identified by category. Every card here is from a different issuer.

Change in credit card approval

It’s not universal, but overall there’s definitely some tightening happening in credit card approvals. The issuer for cash back card A in particular stands out for a very steep decline in approval rating.

Positively, some issuers who showed a decline in total approvals for the month of April saw a bounce back in May.

This is something else we’ll be keeping an eye on – if there’s a change in how many people are getting approved for a new credit card.

Do you know if you have a good credit score? Learn about how your credit score impacts your chances of approval.

Study: What Is A Good Credit Score ‒ And Is It Good Enough To Be Approved?

The future of consumer demand for credit cards

So what will happen in the future?

We anticipate that cash back credit cards will remain more popular in the months ahead. They provide easier to understand rewards that can be used for anything giving consumers the most choice.

We also anticipate that the banks will continue to tighten their approvals process for the time being, and that people in the near term will increasingly be looking for credit cards that are easier to be approved for.

And while it hasn’t happened yet, we believe low interest credit cards will pick up in popularity, as more people are taking on debt.

Related: 21 Budgeting Tips, Techniques, and Tools

In summary

There’s no doubt that consumer preferences have shifted during the recent pandemic, mostly when it comes to rewards. Cash now really is king in credit card rewards for the time being.

Have you recently looked at what’s in your wallet?

Have you changed credit cards recently?

Let us know in the comments below.