Cash Back vs. Points: What Credit Card Holders Really Want
When it comes to choosing a credit card, American cardholders have a clear favorite: cash back. According to a recent survey conducted by Bank of America, 70% of respondents identify cash rewards as the best perk a card can offer. This preference appears to be especially strong among consumers who don’t pay annual fees. Let’s delve deeper into what different types of cardholders value in their rewards.
The Cash Back Craze
Among individuals who don’t pay an annual fee for their credit card, a whopping 84% indicated that cash back is their top priority. Even for those with cards that do have annual fees below $250, 75% still lean towards cash rewards.
Why is cash back so appealing? For many consumers, it’s straightforward: you earn money on every purchase, providing immediate gratification and flexibility. Unlike points or miles, cash can be spent anywhere, making it a universally appreciated perk.
Points for Premium Cardholders
However, the landscape shifts when we focus on premium cardholders—those who pay annual fees of $250 or more. Interestingly, just 33% of this group identified cash back as their primary preference, while 52% leaned towards points. This suggests that higher-income individuals, often male (65% of premium cardholders), may enjoy the allure of accumulating points for travel and exclusive experiences.
Lifestyle Rewards Fall Flat
What doesn’t seem to resonate with consumers? Exclusive access to events, airport lounges, and discounts at retailers. Bank of America’s findings reveal that these lifestyle rewards, despite being heavily marketed, are not considered valuable by a majority of cardholders. Many simply prefer straightforward cash benefits over complicated rewards that come with conditions.
Who Are These Premium Cardholders?
Another surprising detail from the survey is the demographic. Premium cardholders aren’t only older, as previously thought; about 19% of them are under the age of 30. This younger demographic showcases a shift in consumer behavior, challenging traditional stereotypes.
The Rise of Annual Fees
It’s also worth noting that roughly 45% of credit cardholders have a card that carries some form of annual fee, which exceeds previous estimates of 15% to 27%. As consumers seek rewards, many are willing to pay for premium benefits—but it seems that what they value varies significantly based on income and lifestyle.
Final Thoughts
In the ever-evolving world of credit cards, understanding what rewards matter most can help you make an informed choice. If you’re someone who loves simplicity, cash back might be your best bet. But if you enjoy the thrill of travel and experiences, and don’t mind paying a higher fee, premium points could be worth considering.
Ultimately, it’s about aligning your card rewards with your spending habits. Take time to evaluate what fits your lifestyle best, and you might find yourself more satisfied with your credit card choices.
Writes about personal finance, side hustles, gadgets, and tech innovation.
Bio: Priya specializes in making complex financial and tech topics easy to digest, with experience in fintech and consumer reviews.