Bread Financial rounds out product suite with general-purpose credit card

The news: Bread Financial (formerly Alliance Data Systems) launched the Bread Cashback American Express credit card, which offers unlimited 2% cash back and zero annual fees or foreign transaction fees, per a press release. The card’s benefits also include zero fraud liability, identity theft insurance, and Amex lifestyle perks like dining and entertainment discounts.

The bigger picture: Bread Financial is repositioning itself as a tech-forward and consumer-focused brand.

• Bread Financial rebranded in March, taking up the name of the buy now, pay later (BNPL) startup it acquired in 2020 for $450 million.
• The name change emphasizes the brand’s ties to BNPL, which is attracting consumers despite regulatory scrutiny: The number of US BNPL users is expected to grow 31.4% year over year in 2022 and hit 59.3 million, per Insider Intelligence forecasts.

And the new card highlights Bread Financial’s push into general-purpose cards. Bread Financial is one of the top private-label issuers, so moving into general-purpose cards might indicate a desire to diversify its offerings. General-purpose cards cater to a wider consumer market than co-brand and private-label cards, which lets them rake in higher volume in comparison.

Can it succeed? While the Bread Cashback Amex card offers fewer bells and whistles than other general-purpose cards, it might be attractive for consumers who desire a straightforward card with key security perks.

The card’s uncomplicated rewards structure is a plus.

• Rewards are a major customer acquisition and retention driver for issuers—but 29% of US adults said they find reward programs confusing, per December 2020 Ipsos data. Offering unlimited 2% cash back with no caps or categories to manage takes the hassle out of rewards redemption, which might encourage adoption.
• And the card’s 2% cash-back rate helps it stand out from other flat-rate cash-back cards on the market, many of which offer 1.5% cashback.

Consumers like security benefits—and BNPL.

• Offering purchase protection, zero fraud liability, emergency assistance, and identity theft insurance can play into in-demand card features: Consumers ranked security and control as the second-most-important feature category in our 2021 US Cash-Back Credit Card Emerging Features Benchmark report.
• If Bread Financial later integrates BNPL into the card, it would become even more compelling, especially for younger consumers: 35.4% of Gen Zers and 32.7% of millennials use BNPL, per our forecasts.