U.S. News Survey of Rewards Card Users Offers Useful Insights

Savvy consumers with good credit can choose from dozens of different cash back, points and travel rewards cards today. Signing up for “free” rewards just for using your credit card sounds great, but how much are you actually going to earn in rewards and are you really going to use those rewards.

U.S. News undertook a survey of rewards credit card holders in April of 2017. The survey received 1,271 verified responses from rewards card holders who were asked about the rewards they received and their redemption habits.

Reason for selecting a rewards card

According to the survey, the top three reasons respondents selected their rewards card were cash back (27.3 percent), travel, airline or hotel rewards (21.1 percent), and no annual fee (17.7 percent).

Rewards cardholders are not taking full advantage of their benefits

While the large majority of survey respondents claimed that they had earned some rewards during the last 12 months, just over 70 percent of rewards cardholders reported they are taking advantage of all benefits and paying off their balance in full every month. The survey showed that 97 percent of rewards card holders replied that they received some rewards over the last 12 months, but 22 percent answered they had not used all of their cardholder benefits. Moreover, a mere 28 percent of rewards cardholders replied they received a sign-up bonus, and 14 percent responding that they don’t know whether they did or not (keep in mind that not all rewards cards offer a sign-up bonus).

USN survey highlights many cardholders don’t research rewards programs

The survey data also showed that rewards card holders are not making much of an effort to research rewards programs before applying for a card. Moreover, relatively few cardholders are sitting down to compare their card to other available rewards cards every couple of years to see if they are getting the best deal given their spending and personal habits.

A shocking 46 percent of those surveyed responded they had not done any research before applying for their rewards card, and 56 percent replied they compared rewards cards less than once every three years.

It is important to do some basic research on what rewards card will give you the most benefits. For example, you don’t want to pay a hefty annual fee for a card that gives you access to private airport lounges using your rewards points/miles if you only travel once or twice a year.

Changing spending habits because of a rewards card is not a good idea

Two-thirds (66 percent) of the respondents to the survey replied they spent close to the same amount of money a month on their rewards card as they usually do even knowing they get rewards. Unfortunately, over 14 percent said they were actually spending more

now because they had a rewards card, and 20 percent did not know if they were spending more.

Personal finance counselors generally advise clients that spending more than your usual budget on your card just because you are earning rewards is not a good idea. You need to sit down and do the math regarding the rewards you will actually earn before you spend more than budgeted on your rewards card.

Of interest, 20 percent of respondents replied that they had received at least $500 in total dollar value in rewards over the last 12 months. Barely three percent claimed they had received no rewards over the last 12 months.

Financial advisers suggest researching and selecting a rewards card that fits your lifestyle and purchasing habits, paying off your balance completely every month, and having a plan to make sure you take advantage of all the card benefits.

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