On the Money: Robots predict how you'll spend your points

You're going to use those credit card points on that trip to Tahiti this year; you just don't know it yet.

A growing number of credit card companies are using artificial intelligence software to convince customers to use their credit card points in a certain way, be it redeeming their points for travel, dining, shopping or gift cards, with the goal of keeping those customers spending more and loyal to their cards.

Companies have used your past purchases to market you items for years. If you buy a tennis racket from Amazon, soon you'll get ads from Amazon trying to sell you tennis balls.

What credit card companies are doing differently is using other measurements that would typically not be associated with a particular type of consumer behavior as predictors. Banks and other credit card companies have some of the most intimate details on an average person's spending; knowing how much a person typically spends a month on particular categories and what merchants they shop at, and in some very limited cases, information on what exactly they purchased, such as a hotel room or airline tickets.

"It used to be 'we saw you shop at Apple, so we are going to send you ads for Apple.' Now, you may not have spent a dollar at Apple previously, but because you spend at other retailers or fit the profile of an Apple customer we can target you," said Jesse Wolfersberger, senior director of decision sciences at Maritz Motivation Solutions, a company that recently partnered with British bank HSBC on its credit card rewards program.

In the case of Maritz, HSBC sent marketing emails to 75,000 customers using Maritz's algorithms. A portion of customers received an AI-recommended particular category of credit card reward — travel, merchandise, gift cards or cash back — while the rest received standard marketing emails. Roughly 70 percent of the targeted customers who ended up redeeming their points chose the recommendation generated by the computer, Wolfersberger said.

"What we see is when people are more engaged with a rewards program they tend to spend more," said Marcos Meneguzzi, head of cards at HSBC.

Other credit card companies have been using big data, or artificial intelligence to predict where a customer will spend their money or market items to customers for a few years. American Express has a program known as Amex Offers, which could be a coupon or additional reward points when a customer spends money at a particular merchant. Which American Express customer gets targeted for a particular offer depends on their spending behavior, a company spokeswoman said.

Customers can use this to their advantage as well. The more money you spent in a particular category of merchant, the more offers you're likely to get. (In the case of this dog-owning reporter, he gets Amex Offers for pet supplies on a near constant basis, whereas a fashion-minded friend gets offers for Italian label Bottega Veneta.)

By creating programs that get customers to spend money on the card, or use their reward points, the credit card companies keep customers more closely tied to the company's card and less likely to switch to a new one. Also it's in the company's best interest to get the customer to redeem points as cheaply as possible, so marketing that encourages a customer to use their points in a particular way could be beneficial to the company as well.

Right now companies are only able to adjust and market opportunities for customers to redeem their points in broad categories. Wolfersberger expects credit card companies, using AI, will be able to market specific gift cards to customers or even specific products. It also could be possible for credit card companies to tweak their entire reward programs based on changes in spending behavior as well.