06/27/2011 05:21 pm ET Updated Aug 27, 2011

Rewards Cards That Do It Your Way

User-generated content is all the rage on Internet sites, and many credit card issuers are following that trend to let younger cardholders generate their own rewards programs. predicted in 2004 that a new generation of consumers would co-create new products and services around their lifestyles. Dubbing the trend "Generation C" (for Content), Trendwatching also noted that "customer-made" goods require much more than off-the-shelf customization. To really exceed expectations in a new economy, marketers would have to allow their own customers into the process of creating new versions of familiar products.

Reinventing the credit card

A year ago, American Express launched Zync, a new version of its iconic charge card aimed at American consumers in their 20s and 30s. While most banks offer versions of their most basic credit cards geared to students and young professionals, Zync represents the travel service company's strongest attempt to connect a new audience to the concept of paying for the perks they actually want.

To create Zync, American Express used a nontraditional research and development process. Instead of rebranding an existing set of features and benefits into a youth-oriented card, American Express product managers aligned themselves with young professionals who closely resembled Zync's target audience. By combining industry knowledge from within their organization with insight from research panels, the Zync team set the tone for an all new American Express card.

Embracing a global trend of customer involvement, American Express invited its target customers to help reinvent the charge card. Likewise, Capital One and Discover use customization tools to allow cardholders to create the best rewards credit cards for individual needs.

How Zync works

Zync's launch campaign tapped into the customer co-creation concept to create a no-limit card that emphasized lifestyle rewards instead of long-term debt. American Express sliced its usual array of Membership Rewards into a series of "Packs." Each Zync cardmember can opt in to any of four free Packs that help shape their experience:

  • Give Back: Bonuses for charitable donations and volunteer service
  • Family Travel: Access to a family vacation concierge
  • Personal Finance: Free credit score and reports
  • Eco: Double points at "green merchants"

With suggestions from its companion online community, nicknamed the "Zync Tank," American Express added six more reward Packs, with extra annual fees ranging from $5 to $20 each.

  • Music: Pre-sale access to concerts, double points on tickets

  • Go: Airfare and travel bonuses

  • Food and Wine: Food & Wine magazine subscription and other perks for foodies

  • Connect: Double points on phone and Internet bill payments

  • Style: Special rewards at department stores and on

  • Restaurant: Double points on dining and access to special events

With a base annual fee of $25, Zync cardmembers can enjoy many of the same rewards and benefits as a traditional Green Card customer. By opting in to more of the bonus Packs, Zync cardmembers customize their reward point earning and redemption to better fit their lifestyle. In some cases, Zync cardmembers can earn more Membership Rewards points and bonuses than a Platinum Card member.

Best rewards cards from Capital One and Discover

The Capital One VentureOne Rewards Card and the Discover More Card show that these issuers aren't content to let American Express Zync stand alone as one of the best rewards credit cards of the past few years. Both card issuers leveraged their existing systems to offer unprecedented degrees of customization. Both lenders also offer something American Express Zync can't match: the ability to carry a balance beyond a statement cycle.

In 2007, Capital One launched the "Card Lab," an ambitious online experiment that let prospective customers design their own rewards credit cards. Card Lab customers mix and match account features, even customizing the images on their own cards. As with Zync, annual fees go up as customers add extra rewards. However, customers who match earning opportunities to their lifestyles can collect enough merchandise, miles, or cash rebates to cover the cost of their cards and then some.

Discover took a different approach to reinventing its classic rewards credit card for Generation C. In late 2009, the company issued a challenge on its Facebook page to help redesign its Student Card. Over 200,000 site visitors selected the image of a cassette mix tape for a retro look.

Like other Discover Card accounts, the Discover Student Card earns a 1 percent CashBack Bonus on all purchases. However, students can select additional rewards of up to 5 percent on purchases in rotating categories, such as travel, fashion and restaurants.

Best credit cards for customer-selected rewards

Discover and Capital One may not offer a selection of customizations as diverse as Zync from American Express, but all three cards offer consumers the chance to personalize their cards and optimize their rewards. Each card comes with its own pros and cons.

Capital One's Visa and MasterCard offerings enjoy the widest acceptance and carry some of the most lucrative rewards, but could also tempt customers to carry balances at higher than average APRs. More retailers accept Discover than ever before, but many of the card's rewards offers include earning caps.

Zync, like other American Express charge cards, doesn't allow cardmembers to carry a balance month to month. For customers who are comfortable paying off their balances each month, this feature makes Zync an attractive alternative to debit and prepaid cards.

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"Rewards cards that do it your way"