Bread Financial’s Strategy Change Includes Consumer Amex Card

The news: bread financial (formerly Alliance Data Systems) launched the Bread Cashback American Express Credit Card, which offers unlimited 2% cash back and no annual fees or foreign transaction fees, according to a press release. Card 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 forward-thinking, consumer-focused brand.

  • bread financial renamed in March, taking over the name buy it now, pay later (BNPL) start it acquired in 2020 for $450 million.
  • The name change underscores the brand’s ties to BNPL, which appeals to consumers despite regulatory control: The number of BNPL users in the United States is expected to increase by 31.4% year-over-year in 2022 and reached 59.3 million, by Insider Intelligence forecast.

And the new card highlights Bread Financial’s push into general purpose cards. Bread Financial is a leading private label issuer, so the move to general purpose cards could indicate a desire to diversify its offerings. General purpose cards cater to a wider consumer market than co-branded and private label cards, allowing them to garner a higher volume in comparison.

Can he succeed? Although the Amex Bread Cashback Card offers fewer bells and whistles than other general purpose cards, it may be attractive to consumers who want a simple card with key security benefits.

The simple rewards structure of the card is a plus.

  • Rewards are a major driver of customer acquisition and retention for issuers—but 29% of American adults said they find reward programs confusingaccording to Ipsos data as of December 2020. Offering unlimited 2% cash back with no caps or categories to manage simplifies the redemption of rewards, which could encourage adoption.
  • And the card’s 2% cash back rate makes it stand out from other fixed rate cash back cards on the market, many of which offer 1.5% cash back.

Consumers love the security and BNPL benefits.

  • Offering purchase protection, zero fraud liability, emergency assistance and identity theft insurance can play a role in in-demand card features: consumers ranked security and control as the second category feature in our 2021 U.S. Cash Back Credit Card Emerging Feature Benchmark report.
  • If Bread Financial later incorporated BNPL on the map, it would become even more compelling, especially for younger consumers: 35.4% of Gen Zers and 32.7% of Millennials use BNPLby our forecasts.


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Don F. Davis