Cash Back Rewards Are Once Again In Vogue

Cash Back Rewards Are Once Again In Vogue
  • Opening Intro -

    Prior to the economic meltdown of 2008, cash back rewards programs on credit cards were frequently offered and generously packed with amenities.

    That quickly changed when the economy nose-dived and consumer default rates surged.


Credit card companies lost the mood for winning over new customers and, instead, cut or froze credit lines for millions of consumers.

Rewards Programs

Although the economy is far from recovered, credit card issuers are seeing some strengthening in a market that was once known by lax regulatory oversight and ease of consumer access. Indeed, has found that cash back rewards programs are on the upswing, publishing these findings in its 2011 Cash Back Rewards Credit Card Survey.

That survey offers a breakdown of what key issuers are offering consumers today, the card offered and the cash-back ratio. Included in Bankrate’s findings we learn:

  • 1 percent cash back continues to be the baseline from which comparison should begin;
  • Almost half, or forty-four percent, of the cards surveyed have a 1 percent payout beginning with the first dollar of spending;
  • Introductory bonuses are common, with 41 percent of cards offering, but the bonuses are also on the rise from last year;
  • Of the cards surveyed, 28 percent offer higher payouts in certain categories of spending, including gasoline, groceries and travel;
  • Half of the cards surveyed had no expiration date.  Of those that did have a time limit, the most common was five years before rewards expire.

No Deal

As important as rewards cards are for consumers, they are worthless for people who carry balances on their cards each month. That’s because the amount you dish out in interest payments easily consumes the value of your rewards and then some.

For example, if you buy something for $1000 and take four months to pay your balance off, you’ll pay four months of interest which on a 12 percent simple interest rate is $30. Most cards will only give you one point for every dollar spent. In this example your points will be valued at $10 — you’ve lost $20 by carrying a balance.

Incentive Options

Some rewards cards offer different incentives based on your purchases. Writing for The Houston Chronicle, Sharon Buggs noted that filling up at the service station and using a rewards card can yield the most points, as high as 5 percent on purchases. With gas prices surging, that $100 fill up can now be offset by $5 in rewards, not enough to take the sting away from higher pump prices, but perhaps offering a bit of salve to east that pain.

Adv. — If you’re looking for a new credit card, then has all kinds of cards for your review including some of the best rewards cards on the market. Remember, pay off your balances monthly to make an incentive card work for you.


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Categories: Consumer Tips

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".