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Rewards cards target sharing services, and their millennial fans

Card issuers chase young consumers who value travel, experiences and saving money

Summary

As millennials embrace the sharing economy, card issuers are rolling out new cards or upgrading their rewards programs to offer benefits for using such services

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The sharing economy is booming, and now is a great time to be a rewards junky with a fondness for services such as Uber and Airbnb.

As millennials embrace the sharing economy, credit card companies are rolling out new cards or upgrading their rewards programs so they can offer extra benefits for using such services.

“One of the biggest drawbacks of traditional credit cards is the lack of points and perks within the sharing space. However, some credit cards beat out the competition,” said Marc Diana, CEO of MoneyTips.com.

Research suggests travel and saving money are priorities for millennials, and that they’re keen on using rewards cards. Cards that reward spending on sharing services can help them put it all together.

Sharing services spending skyrocketed last year

Both ridesharing and homesharing are going strong, according to a Bank of America study. The bank examined data from more than 50 million of its credit and debit cards to determine how they were used for summer travel in 2017.

The number of ridesharing transactions, as well as spending on such services, soared by two-thirds from 2016 to 2017, while the number of transactions and the amount of spending on taxis and limousines declined slightly, the Bank of America study found.

During that same time period, the number of homesharing transactions and the money spent on such transactions jumped 46 percent. The spending on hotels and number of hotel transactions rose slightly.

The average cardholder spent more than $750 on homesharing services and more than $140 on ridesharing services in the summer of 2017, Bank of America found.

Millennials use sharing services to save time, money

While the sharing economy has gained attention across all age groups, it’s particularly popular among people under 35. A 2017 study by the market research firm maru/matchbox found almost one-third of millennials use ridesharing services such as Uber or Lyft, compared to just 12 percent of those 35 and older who use them. And 30 percent of people under 35 use homestay services such as Airbnb, compared to 11 percent of those age 35 and older who do so.

“Millennials use the sharing economy to conserve two precious things: time and money,” maru/matchbox said in its study.

Saving money can be a key concern for millennials, who often are cash strapped because of hefty student loan debt and high health care costs, says Kevin Morrison, senior analyst at the Aite Group, a research and advisory firm. “They’re a bit more frugal when it comes to unsecured debt.”

See related: Coffee addict? How card rewards can cut your caffeine costs

While millennials have a reputation for avoiding credit cards, a 2018 survey by the Aite Group found 45 percent of millennials had applied for a rewards card in the past year, and 78 percent had applied for a rewards card during the past two years.

Millennials tend to have just one credit card, Morrison said, so they may be more selective when choosing a card. When compared to other age groups, “I think the primary difference is that millennials are a little bit more picky, based on their lifestyle.”

Many millennials prefer to spend their money on travel and experiences, rather than on things. They also tend to prefer credit cards that carry no annual fees, Morrison says. “There’s value in not having to pay for rewards.”

“Millennials use the sharing economy to conserve two precious things: time and money.”

Where to find rewards for homestays, ridesharing 

Some newly introduced cards are focused on the sharing economy, and they don’t charge annual fees. For example, with the Wells Fargo Propel American Express® card, which launched in June, you earn triple points on travel and transit, including homestays and ridesharing. The Uber Visa Card from Barclays, which was introduced last year, earns 3 percent cash back on homestays and 2 percent when you use Uber’s ridesharing service.

“Credit card issuers are definitely trying to reach millennials with these,” said Julian Kheel, senior editor at The Points Guy.

Wells Fargo introduced its Propel card for the consumer “who wants to be rewarded for the things they already do,” said spokeswoman Sarah DuBois.

The Uber card is designed to appeal to the rideshare service’s core riders, who tend to be young, urban professionals, said Stacey Sweeney, vice president of the Uber Visa Card program at Barclays. The points consumers earn with the Uber credit card can be redeemed for cash back, gift cards or Uber credits.

Ridesharing fans might also consider the U.S. Bank Cash+ Visa Signature Card, which pays 5 percent cash back (on first $2,000 in eligible purchases) on two categories of your choice each quarter. One category is ground transportation, which includes ridesharing. The card has no annual fee.

If you’re planning on using homesharing services, the Capital One Venture Rewards Credit Card and the Capital One VentureOne Rewards Credit Card will earn you 10 miles for every dollar you spend on vacation home rentals, as well as hotels, booked and paid for on Hotels.com/Venture through Jan. 31, 2020. The Venture card charges an annual fee of $95, but is waived in your first year of membership.

In some cases, however, a credit card might offer such a rich range of rewards that it could be worthwhile to pay an annual fee, Kheel says.

For example, the Platinum Card® from American Express requires a steep $550 annual fee, but among the many perks are free Uber rides each month, valued at up to $200 per year.

Before you apply, check the card’s APR, not just rewards and fees

If you’re like many millennials and prefer to carry only one card, it’s important to pick one that best fits with the way you use sharing services and spend money.

“To maximize your spending and turn shared rides and beds into benefits, consider a credit card that rewards you for all your travel purchases, and isn’t limited to hotels and flights,” says Jason Gaughan, Bank of America’s credit card executive.

Along with considering the sharing service perks and annual fees when choosing a card, you also should look at the interest rate you might pay if you carry a balance. The average interest rate is now over 17 percent, according to the CreditCards.com Weekly Credit Card Rate Report.

That makes it incumbent that you pay your credit card bill off each month, Kheel says. If you pay even one month’s interest, “you’re basically offsetting the value you earn in rewards.”

Credit cards that reward spending on sharing services

American ExpressThe Platinum Card from American Express: Receive Uber VIP status and get free rides in the United States up to $15 per month, and a $20 bonus in December, valued at up to $200 per year. $550 annual fee.
Bank of AmericaBank of America Premium Rewards credit cardEarn 2 points for each dollar spent on travel purchases, including rideshare and homeshare services. $95 annual fee.

 

BarclaycardUber Visa Card from BarclaysEarn 3 percent cash back on homestays and 2 percent cash back on Uber. Points can be redeemed for Uber credits. No annual fee.
Capital OneCapital One Venture Rewards Credit CardBook and pay at Hotels.com/Venture and earn 10 miles per dollar spent on hotels, including vacation home rentals, through Jan. 31, 2020. $95 annual fee (waived in the first year of membership).

Capital One VentureOne Rewards Credit CardBook and pay at Hotels.com/Venture and earn 10 miles per dollar spent on hotels, including vacation home rentals, through Jan. 31, 2020. No annual fee.

Chase 

Chase Sapphire ReserveEarn 3X points on a wide range of travel, including ridesharing services and homesharing services. Points can be redeemed for Airbnb and Uber gift cards. $450 annual fee. $300 travel credit annually.

 

CitiCiti PremierEarn 3X points on ridesharing services. $95 annual fee.
U.S. Bank
U.S. Bank Altitude Reserve Visa Infinite Card
Earn triple points on travel, including most Uber and Lyft transactions and many Airbnb transactions. $400 annual fee.
U.S. Bank Cash+
Earn 5 percent cash back on two categories of your choice each quarter on purchases up to $2,000. One category is ground transportation, which includes rideshare services. No annual fee.
Wells Fargo 

Wells Fargo Propel American Express cardEarn 3X points on travel and transit, including ridesharing and homestays. No annual fee.

 

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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