A new CreditCards.com poll shows many consumers continue to be drawn to the simplicity and universal appeal of cash back credit cards. Roughly half of U.S. adults own a cash back credit card – way ahead of every other type of rewards credit card.
Roughly half of U.S. adults have at least one cash back credit card, according to a new CreditCards.com report.
A rewards credit card (held by 49 percent of U.S. adults), well ahead of gas and retail cards (29 percent), airline and hotel cards (20 percent), general travel cards (19 percent) and business cards (18 percent).
Here are some other key findings from our poll:
- Business card ownership expanded the most (10 percentage points), followed by airline and hotel (7 percent), general travel (7 percent), cash back (6 percent) and gas and retail (1 percent).
- At least 75 percent of cardholders redeemed rewards over the past year in each category. Cash back card holders were the most likely to redeem (88 percent did so at least once).
- Millennials cashed in more often than older adults. Half of 23-38 year-olds with a cash back card redeemed at least monthly and 24 percent did so weekly. That’s significantly more than Gen Xers (30 percent at least monthly; 14 percent weekly) and baby boomers (15 percent at least monthly; 4 percent weekly).
- Overall, gas and retail card rewards were redeemed most frequently. Forty-three percent of those cardholders did so at least monthly and 23 percent weekly, compared with 30 percent at least monthly and 13 percent weekly for cash back cards).
- Cash back card usage skews higher among Northeasterners and parents. Some 56 percent of Northeasterners have at least one cash back card 51 percent of Westerners, 47 percent of Southerners and 43 percent of Midwesterners.
- And while 54 percent of parents have a cash back card, that figure drops to just 43 percent of non-parents.
As a parent who lives in the Northeast and favors cash back cards, I agree! Regarding the parent/non-parent divide, I believe the explanation is twofold.
First, raising children is expensive, so any extra cash is appreciated (especially given the high cost of living in the Northeast). Second, it’s harder to travel when you have kids. That applies to schlepping tons of stuff onto an airplane as well as organizing trips around work and school schedules (particularly since travel tends to be pricier and busier during school breaks).
I’m pleased that the vast majority of rewards card holders took advantage of their points and miles over the past year, and I’m surprised at how frequently many people redeemed. This suggests that Apple Card’s “Daily Cash” feature will especially resonate with the younger set. Most cards post rewards just once a month, so it’s notable that 30 percent of cash back cardholders cashed in at least once a month and 13 percent managed to do so every week.
Only one of my four cash back cards grants rewards more than once a month (the Capital One Quicksilver Cash Rewards Credit Card, which makes cash back available within a few days of each transaction). As much as I like cashing in, I usually wait until I accumulate $30 or so, which tends to be every three or four weeks.
See related: The perfect cash back card
What’s better, cash back or travel rewards?
Mathematically speaking, transferable travel rewards (such as Chase Ultimate Rewards, American Express Membership Rewards and Citi ThankYou points) provide the most value. If you know what you’re doing, you can get three, four, five or sometimes even more cents per point or mile. There’s also a diversification benefit to keeping your options open with a variety of airline and hotel partners.
But managing all of this requires a good amount of effort and knowledge, and not everyone wants to dedicate that much time or energy. Many people – including me – are drawn to the simplicity and universal appeal of cash back programs.
At the end of the day, the best reward for you is one that you’re going to use and enjoy. Once you’ve established how much work you’re willing to put in and what your desired redemption looks like, make sure that your credit cards match your lifestyle.
With different cards offering different rewards on categories such as groceries, dining, travel and more, pick the right cards for how you spend your money. Or, if you want to keep it really simple, opt for one of the best flat-rate cash back credit cards.