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Customer survey: Essentially 3 /4 of rewards card holders already have more than one cash-back card
Cash back is – without a doubt – Americans’ favorite credit card reward. Credit Cards.com not long ago commissioned a nationwide representative survey and discovered 57 % of U.S. adults now have at least one rewards credit card. Cashback cards are the preferred (forty three %), well ahead of other kinds of rewards cards which include gas/retail (twenty-eight percent), airline/hotel (13 percent), general travel (12 %) and business (8%).
To put it a different way, about 3/4 of rewards card holders have more than one cashback credit card. And most turn out to be benefiting from this chance to earn free revenue.
Some 52 % of rewards card holders already have redeemed for cashback in the past 12 months, and the other 29 % already have changed out their points for gift cards, which are essentially the same as cash. However, more than one in 5 (22 per cent) haven’t redeemed any rewards at all. Thirteen per cent have exchanged their points or miles for goods; just nine % traded in for a totally free hotel stay and merely eight per cent did so for free air travel.
That sounds surprisingly low, but it’s backed up by a prior customer survey commissioned by The Points Guy, which stated that only thirty-nine percent of U.S. adults had taken any airline trips at all in the last 12 months. I feel some of us within the industry tend to forget how many people are inclined to stay close to home. That could be by choice, lack of travel funds or simply because they can’t get a break from work or family responsibilities.
All of this helps show you why money-back cards are quite popular. Everybody is able to use extra money, and cash is incredibly versatile. There aren’t any blackout times, no work, school or family commitments to schedule around and no hoops to leap through. Naturally, travel charge cards can be great options for certain people, but I fully grasp why the masses would like cashback.
Hold the charges, too
A similar trend is that most rewards card holders favour cards with no annual fees. Nearly 3 out of every four rewards card holders (72 per cent) possess one or more card with no yearly fee. Some twenty five % own a yearly charge between $1 and $75, 15 % already have a yearly service charge between $76 and $150, and 10 % own a yearly charge of $151 or more. This again shows that most of the people value simplicity and frugality from their charge cards. I 100 % agree – as I wrote in a previous column, annual service fees frighten me. By all means, if you travel a lot and have your dinner at a lot of restaurants, yearly charge cards can present you with great advantages. But that’s a certain subset of people, not the standard.
Word of advice
Tip: Although some cards offer extra bonuses on specific categories year-round, others increase your cash back in rotating categories – which change quarterly – if you register for them online each quarter. In some cases, for example with some Discover or Chase cards, this can quintuple your cash rewards.
A few troublesome statistics emerged from the research: only forty one % of respondents said they pay their rewards cards in full every month. You shouldn’t pay 17 per cent interest (the country’s average) just to get 1 or 2 % in rewards. If you’re in this situation, you should open a card with 0 per cent annual percentage rates (even if it means sacrificing rewards) or stick to atm cards and cash.
And while another 20 % pay their rewards card bills entirely most of the time, that leaves 35 % who pay their entire statement balance no more than half of the time. Even worse, 10 % never make a full payment. Don’t allow this to be you.