Credit card issuers could start using your data for personalized rewards — but at what cost?

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• Credit card issuers could start customizing your rewards based on your personal data. 
• Imprint, a co-branded credit card issuer with a technological approach to rewards, believes that personalization is the key to a more consumer-centric experience.
• Daragh Murphy, co-founder and CEO of Imprint, discusses the difference between how social media mines personal data and how Imprint plans to establish trust with consumers. 
• Read Insider's guide to the best rewards credit cards.

It's common practice for major credit card issuers to track where, how, and how often you use your card. This became an established practice in order to verify cardholders' identities and help protect customers against fraudulent activity. Plus, it assists in establishing credit scores and limits.

But what if that collected data was used to further personalize your credit card experience? What if your credit card started offering you enhanced rewards in personalized spending categories based on your past purchases? 

Daragh Murphy is a co-founder and CEO of Imprint, a credit card issuer with a technological approach. He describes how the credit card world is changing, but through established trust and company transparency Imprint plans to stay ahead of the game.  

We're focused here on the rewards and perks that come with each card. These cards won't be worth it if you're paying interest or late fees. When using a credit card, it's important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

The future of personalized credit card rewards

You're likely no stranger to having your personal data re-targeted to you. Some of the most popular social media platforms like Facebook and TikTok are notorious for using consumer data to create targeted content. Now, your credit card might start doing the same thing.

Credit card issuers already use consumer data to develop worthwhile promotions and exclusive offers based on spending habits and current financial trends. Some of the most popular credit cards earn valuable cash back, points, or miles in bonus spending categories like gas, groceries, travel, and even retail purchases. Depending on where you do the majority of your shopping, you can open a card that best fits your personal spending needs.

But what if your credit card could adapt to your current spending habits automatically? Your credit card is already tracking your purchases, so why not put that data to good use?

How Imprint plans to develop personalized rewards based on consumer data

Imprint believes that personalization is the key to a more consumer-centric experience.

Personalized content and products already exist, so it makes sense for credit card programs to move in that direction too. "Creating an offer must capture what the consumer likes or needs, and needs to give them real value or access to something they want," said Daragh Murphy.

Imprint considers timing to be a key factor in personalizing rewards and wants to offer promotions that are proactive about benefiting its customers. It plans to offer relevant rewards with accelerated rates based on individual lifestyle habits. 

Murphy gave the example of a customer who books a trip in the mountains. "An offer for multiplied rewards on outdoor gear the day before they leave wouldn't be valuable for the customer, since they've likely already purchased everything they need," he explained. Instead, Imprint co-branded cards would want to offer this traveler increased rewards on purchases made at popular local restaurants or stores at the mountain site. 

You could also be offered accelerated rewards for purchasing goods, such as performing the weekly grocery run at an unusual time (based on individual habits). 

"If someone usually buys their groceries every Wednesday at the same store, on Monday they could receive an offer for multiplied rewards for purchasing more of their favorite items at the stores," Murphy said. Or you could earn more rewards at locations near that grocery store, such as a gas station. 

The benefits of personalized rewards programs

There are some undeniable perks to having a more customizable credit card, such as eliminating the stress of finding the "perfect" card and getting more bang for your buck with significantly less effort.

When you're visiting your favorite restaurant, or even preparing for the holiday season, it could be comforting to automatically know you're going to get enhanced rewards without even lifting a finger.

Plus, the reward and redemption opportunities usually popular for your age group (or even your location) can be factored in. This can be beneficial not only for the credit card novices attempting to make savvy decisions but also for folks looking to give back to the community.

For example, charity donations are becoming a more popular way for Gen Zers to redeem credit card rewards, but not all credit cards offer that as an option. That's why Imprint wants to use data to identify customers looking to make an impact and provide the tools to automatically donate their rewards to the charity of their choosing. 

The risks of personalized rewards programs

However, not everyone is fond of having their data collected. In fact, Virtual Private Network (VPN) programs were designed to encrypt users' internet traffic and prevent third-party data tracking. Having your personal data collected can not only feel creepy but also be dangerous when placed in the wrong hands. 

Since credit card data is necessary for protecting consumers against theft and fraudulent activity, you wouldn't be able to protect yourself against a larger business or organization misusing your data for its own gain. 

In my own experience, I'm uncomfortable and can often feel over-perceived by targeted content, especially when I know it's just being used to try and make me buy more things. And although that doesn't seem to be Imprint's intention with its personalized rewards program, the innovation of its customized offers opens up a whole can of worms that could drastically change the future of credit card rewards programs.

Imprint plans to tackle the issue of feeling 'over-perceived' with transparency

Imprint wants to stand out in the crowd and establish a relationship that customers and brands alike trust wholeheartedly. To do so, the company keeps itself in check by being fully transparent with its customers and by developing a human approach to its policies. It wants to be upfront about how it's using its customers' data.

"This is a really intimate thing. Financial services are based on trust, so it's a trade-off of how to you get the best rewards that are most customized to you without feeling like you're over-perceived," explained Murphy. "The difference between us and social media is that social media tries to get you to not know what they are collecting. They are building more content to fire at you so you get more hooked. That's not something we do, nor would we ever." 

But as Murphy puts it, this approach is new and some trial and error will likely take place.

"We will, at some point, over-perceive somebody and we'll hear feedback and then we'll correct. Again, it's about trust," said Murphy. Trusting in a business can often feel impossible nowadays, but companies like Imprint are trying to change that. 

Still, I'm hesitant about having a credit card issuer use my data to personalize my rewards. Although I can't deny the convenience and even the accessibility of reward earnings, I can't help but feel protective of my personal data. I'm someone who occasionally prefers to shop incognito, and with fewer places accepting cash as a payment method, the ability to avoid leaving a money trail is diminishing.