Cash Back vs Points: What Credit Card Holders Really Want
Americans Tend to Favor Cash Rewards Over Credit Card Benefits, According to Bank of America Study
Ever wondered what credit card perks are most valued by users? A recent survey by Bank of America sheds some light on the topic.
Turns out, the majority of credit-card holders, particularly those without an annual fee, are all about cash back. In fact, 70% of the 2,000 Americans surveyed said that the best perk a credit card can offer is cash back.
But when it comes to premium cardholders, things get a bit different. Premium cardholders, defined as those with an annual fee of at least $250, tend to value credit card points more. Only 33% of this group valued cash back most, while 52% had a greater appreciation for card points.
You might be thinking, "Okay, so premium customers like points more than cash back. Big deal." But here's the catch: premium cards often come with more than just points. They offer access to exclusive events, airport lounges, and discounts at specific retailers.
But consumers generally aren't too fond of these perks. Despite their prevalence in recent marketing, these "lifestyle rewards" along with airport lounge access and retailer discounts weren't highly rated by respondents.
So why the preference for points? Well, premium points can be redeemed for travel or luxury experiences, which aligns with the higher income and travel-focused preferences of premium cardholders. Premium cards like the Chase Sapphire Reserve offer higher redemption values for points (1.5 cents each via Chase Travel), enhancing their value.
On the flip side, non-premium cardholders generally prefer cash back as a straightforward, flexible reward. Mid-tier cards like the Chase Sapphire Preferred have lower annual fees ($95 vs. $550 for the premium Sapphire Reserve) and slightly lower points redemption values, appealing to consumers who want rewards without a high fee commitment.
It's clear that credit card preferences really boil down to personal spending habits, income, and travel frequency. If you're a frequent traveler or have a higher income, a premium card might be worth the annual fee for those valuable points. But if you're just looking for a straightforward rewards system, a no-fee card with cash back might be the better choice.
References:- [1] Bank of America- [2] CreditCards.com- [3] NerdWallet- [4] Travel + Leisure- [5] Forbes
Learn More:Interested in understanding the ins and outs of credit card rewards? Check out our guide to credit card rewards to make the most of your spending! tips@our website
Insights Integration:
The survey found that premium credit card holders generally preferpoints over cash back rewards, a stark contrast to non-premium cardholders. Premium cardholders lean towards higher income and male, while the demographic profile of non-premium cardholders is more diverse. Premium cards offer extensive travel-related benefits like airport lounge access, travel insurance, and elite hotel statuses, as well as higher points redemption values. Mid-tier and no-fee cards, on the other hand, have lower annual fees and fewer luxury travel perks, but still offer decent rewards and some travel-related perks at a lower cost.
In the realm of personal finance and business, premium credit card holders, who often have higher incomes, tend to value credit card points more than cash back, contrary to non-premium cardholders. These premium cards not only provide points for travel or luxury experiences, but also offer exclusive benefits such as airport lounge access and travel insurance. On the other hand, mid-tier and no-fee cards, popular among a more diverse demographic, offer cash back rewards as a straightforward, flexible option, with lower annual fees and fewer luxury travel perks.
