Market Overview

1-In-3 People Use Credit Cards Just For Rewards


Do you consider a rewards program as an integral part of your credit card choice? According to a new study by, close to one third of Americans use credit cards just to get the associated rewards.

The finder survey suggests that approximately 71.7 million Americans (29.2 percent of the adult population) make credit card purchases just to receive the rewards. We spend an average of over $2,400 per person — almost $176 billion total — making purchases to rack up points.

"The powerful rewards associated with a credit card have been quite a motivator for consumers to swipe their plastic," reveals's Consumer Advocate, Jennifer McDermott. "Earning cash, travel miles or other items in exchange for using a particular payment method can feel like a major win at the time, but it can lead to overspending and going into debt."

Where do we make our rewards-gathering purchases? Clothing and accessories are America's primary indulgences, along with food and drink. Almost 90 percent of the rewards-based consumers made purchases in both of those categories. Over 60 percent of rewards-based consumers bought household items for the rewards, while just under 50 percent bought technology/electronic devices. Shoes weren't far behind.

If you're envisioning the stereotype of female overspending, think again. Finder discovered that men were not only more likely to make credit card purchases just to get rewards (by a 30.9 percent to 27.6 percent margin), men also spent more on these purchases. Women spent an average of $1,852 while men spent $3,021.

Perhaps men spend more because they buy more expensive items to compile rewards. Men were far more likely than women to make technology/electronic device purchases (66.7 percent to 31.7 percent). Men also made more music purchases (27.7 percent to 10.6 percent). Women tended to steer their purchases toward clothing and accessories and food and drink.

The younger you are, the more likely you are to make credit card purchases just to reap rewards. Over 36 percent of millennials make such purchases, while only 30.2 percent of generation X members and 24.3 percent of baby boomers do.

Gen Xers spend the most of all the generations on rewards-based credit card purchases ($2,942 per person) while each baby boomer spends $2,201. Millennials only spend $2,047 each – perhaps because they are more frugal because of coming of age during a recession, or perhaps they just have less money to spend.

You probably have more than one credit card, and at least two rewards cards. Data from the Federal Reserve Bank of Boston in 2013 showed that American credit card holders averaged just over four credit cards, with 2.4 rewards cards. How do you get the most out of those rewards cards?

If you spend just for rewards programs, it's extremely important you review your cards against competing rewards cards. Competition among credit card issuers is fierce. By checking your options periodically, you can feel confident that you're getting the most out of your rewards programs. At the very least, you may be able to extract a better deal from your current card issuer.

Are your rewards needs changing over time along with your purchases? Consider keeping several different cards that cater to different purchases – maybe a travel rewards card and a cash-back card for general purchases. 

Says McDermott, "While we can certainly benefit from the points system, it's important to understand that the system only works in our favor if balances are monitored and controlled.

"There are a variety of factors that consumers should consider when choosing a credit card. While it can be tempting to base your decision solely off the potential loyalty benefits, that could leave you in a financial bind in the long run. Aside from comparing APRs and annual fees, it's important to be realistic about your ability to develop a repayment plan. After all, how beneficial are these rewards if you're stuck paying a hefty bill at the end of each month?"

Looking to learn more? Check out Benzinga's credit card and other investing resources!

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: contributor contributors credit cardsNews Personal Finance


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