Rewards cards remain a hot consumer trend. Virtually every major retailer, airline and cruise line has issued at least one rewards credit card as the popularity of rewards cards has increased dramatically over the last few years. Consumers today can pick and choose from dozens of different cash back, points and travel rewards cards.
Media outlet U.S. News undertook a survey on the habits of rewards credit card holders earlier this year to understand how consumers are using them. The survey included more than 1,271 responses from rewards card holders relating to their rewards and redemption habits.
Top three reasons for choosing a rewards card
The top three reasons respondents replied when asked the main reasons they chose their rewards card were cash back (27.3 percent), travel, airline or hotel rewards (21.1 percent), and no annual fee (17.7 percent).
USN survey shows rewards cardholders are not maximizing benefits
Of note, the vast majority of survey respondents answered that they had earned some rewards over the last year, but barely more seven-tenths of rewards cardholders say they are maximizing the value of their cards by taking advantage of all benefits and paying off their balance completely every month. In the survey, 97 percent of the rewards card holders claimed they received some rewards over the last 12 months, but over 22 percent responded they had not taken advantage of all cardholder benefits. Related to this, only 28 percent of rewards cardholders reported that they received a sign-up bonus, with 14 percent claiming they don’t know (note that some rewards cards do not offer a sign-up bonus).
Relatively few cardholders doing research on rewards programs
Moreover, the responses to the survey also suggested that rewards card holders are not spending much time or effort to research rewards programs before applying for a card. The survey also highlights that relatively few cardholders are making regular comparisons of their card to other available rewards cards to see if they can get better rewards.
Although it seems hard to believe, 46 percent of those surveyed answered that they had not done any research before applying for their card. You don’t have to be a genius to understand why you should take the time to select a rewards program that fits your lifestyle and spending habits, and offers benefits you want and will use.
In fact, 56 percent of the USN survey respondents replied they compared rewards cards fewer than once every three years.
14 % of rewards card holders spend more because of rewards card
Although 66 percent of survey respondents answered they spent about the same amount of money on their cards as they usually do even knowing they get rewards, more than 14 percent replied they were spending more now because they had a rewards card (and 20 percent responded they don’t know if they are spending more or not).
Note that consumer finance experts are unanimous in warning that spending above your budget on your card simply because you are earning rewards is definitely not a good idea.
Related to this, 20 percent of respondents claim they earned at least $500 in total dollar value in rewards over the last year. A mere three percent of those who took the survey replied they had received no rewards over the last 12 months.
Rewards cards have been a boon for many savvy consumers and small business persons. Most are earning hundreds, and some even thousands of dollars of rewards per year. It’s not hard. All you have to do is choose a rewards card that fits your lifestyle and purchasing habits, and make sure you take advantage of all the benefits.