More Than Half of Rewards Cardholders Are Missing Out on Rewards

News Release, Bankrate

New York – January 23, 2020 – Among rewards credit cardholders who pay their bills in full each month, more than half (55%) are missing out on rewards, according to a new survey. The biggest missed opportunities: groceries and restaurants. More than 4 in 10 typically pay for these purchases with debit or cash.

Rewards credit cardholders who don’t carry a balance aren’t reaching their full rewards potential by swiping their debit card or paying with cash when making these types of purchases. For instance, if a consumer were to have a lucrative no annual fee card such as Discover it Miles (3% in your first year as a cardholder), Citi Double Cash (2%) or Wells Fargo Propel (3% on dining, gas and travel and 1% on groceries) in each of these four spending categories, they would earn: $350 with Discover it Miles, $233 with Citi Double Cash and $261 with Wells Fargo Propel back annually (if their spending matched the national averages).

Instead, this is how rewards cardholders who don’t carry a balance from month to month pay for these types of purchases: Rewards Category Debit Card/Cash Credit Groceries 44% 56% Restaurants 43% 57% Gas 37% 63% Airfare 15% 85% Hotel 16% 84%

Meanwhile, there’s a significant generational divide on the form of payment for travel purchases between millennial (ages 24-39) and boomer (ages 56-74) rewards cardholders who pay their bills in full every month. Millennials who purchase airfare are more than three times as likely as boomers to miss out on rewards by paying with debit/cash (25% vs. 7%). Millennials who purchase hotel stays are more than twice as likely to miss out on rewards on hotel purchases (25% vs. 9% who pay with debit/cash). Gas is also a significant category, with 42% of millennials who purchase gas using cash/debit at the pump vs. 35% of boomers.

“It’s disappointing how many people are missing out on earning rewards for purchases they would have made anyway,” said analyst Ted Rossman. “As long as you’re avoiding credit card debt and refraining from overspending, you should be using a rewards credit card for everything as it can make a big difference. Credit cards also offer better consumer and fraud protection than debit cards and cash.”

Over the past year, 72% of all rewards credit cardholders have redeemed rewards, however, only 35% have managed lucrative redemptions like $300 or more in cash back/gift cards (21%), a free hotel stay (11%) and/or a free flight (10%). Another 36% redeemed for less than $300 total in cashback or gift cards.

Of those who are rewards credit cardholders, the biggest cashback earners are millennials (29% redeemed for $300+, compared with 19% of boomers), men (24% redeemed for $300+, versus 18% of women), parents of children under 18 (27% redeemed for $300+, against 20% of non-parents) and higher earners (33% with annual household incomes of $80K+ redeemed for $300+, more than double the 16% with lower incomes).

Methodology: commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. The total sample size was 2,716 adults, including 1,625 rewards cardholders. Fieldwork was undertaken on December 11-13, 2019. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.

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