Credit Card Reward Usage Survey 2018
Have you ever allowed your credit card rewards expire before you use them? You’re not alone. Roughly 30% of consumers have also fallen victim to the “lose them” part of “use them or lose them” rule.
That’s according to a Google survey of 2,500 American consumers we performed in July 2018 to get insight into how consumers use their credit card rewards and benefits — or don’t.
Nearly 30% have allowed credit card rewards to expire
When asked if they’d lost earned reward points to expiration, 29% of consumers said they had.
Have you ever let points or credit card rewards expire before you use them?
- Yes - 29%
- No - 51%
- I don’t have a credit card - 20%
Why do rewards expire? Some rewards programs (especially those tied to frequent-flier and hotel-loyalty programs) require you to have “activity” in your rewards account at least once in a given time frame (generally 18 months). If you leave your rewards sitting untouched (don’t earn or redeem any) for that length of time, your whole rewards balance expires. Fortunately, most cash-back and generic “points” programs won’t expire your rewards unless you close the card.
Why consumers let their rewards expire is another question.
“There are a number of reasons why a consumer might let rewards go unused, though the most common one is probably simple forgetfulness,”says Ashley Dull of CardRates.com.
Our survey results suggest that forgetfulness may indeed be an issue. While one-fourth check in on their rewards balances every month, nearly as many (20%) never check in. More people (9%) check in once a year than every week (6%).
Meanwhile, other consumers may not forget about their rewards — but may abandon them on purpose.
“I consider myself pretty savvy with credit card reward points, but I have had some expire on me,” says Mike Gnitecki, a health care professional (and avid rewards-card user).
For Gnitecki, some of these expirations were on purpose. If a card requires him to redeem 5,000 points at a time and he has a low point balance, he might consider that balance a lost cause and switch to another card with a lower barrier of redemption.
“If a different credit card offers 2% cash back, I'm going to spend on the 2% card and let the other card's points expire,” he says.
Forgetfulness and deliberate (or strategic) abandonment are equally responsible for rewards expiration, says Sheila Murray, editor in chief at loyalty-marketing intelligence company COLLOQUY.
“We have found two primary reasons rewards expire, and these reasons overlap,” Murray says “Members forget they have the rewards, and/or they stop using the program.”
In its 2017 Loyalty Census report), COLLOQUY found that more than half (56%) of the 3.8 billion U.S. loyalty memberships in 2016 were inactive.
To prevent rewards abandonment, Murray says, credit-card program operators can keep cardholders active and engaged in their rewards programs by staying in touch. That might mean offering “compelling offers and communications” informed by use of member data. It might also mean making it “super easy” to redeem rewards — Murray cites the Starbucks Rewards™ Visa® Card Review as an example of an engaging rewards program, thanks to its app that shows cardholders how many rewards they have available.
Consumers tend to “hoard” their rewards
Even if consumers don’t let their rewards expire, they have a habit of letting their points and miles sit for a while. When asked if they’d cashed in their credit card rewards in the past year, fewer than half said they had.
Have you cashed in your credit card rewards in the past year?
- Yes - 43%
- No - 57%
Why do consumers hang on to their rewards for a year or more? The fact that they may need to save large amounts of rewards before they can redeem anything significant may explain why.
"Complexity and limitations to redemption, such as blackout dates on frequent-flier rewards, are major barriers," Murray says.
If consumers need to sock away thousands of miles for a flight and, even then, encounter blackout dates or no reward seat availability, they might end up with long-term stockpiles of rewards. Consumers, Murray says, are “growing increasingly intolerant of these barriers and are finding alternatives.” Hence, the popularity of flexible travel cards like the Capital One® Venture® Rewards Credit Card. It touts its "no hassle" rewards system, which lets cardholders cancel out previous travel purchases with any number of points.
Favorite type of reward: Cash back
Given the frustration with complex rewards programs, it comes as no surprise that our survey respondents favor cash-back rewards cards. When asked which types of credit card reward they’re most likely to use, the largest contingent of respondents (39%) chose cash back. Travel rewards came in second at 24%.
“Cash-back rewards are simple and straightforward,” says Jason Decker, travel rewards consultant at Travel Rewards Coach. “Everybody likes cashback, and it has no learning curve.”
The simplicity of cash-back rewards lies in their consistency (earn $50, redeem $50) and easy redemption (just request a statement credit).
“The complex task of trying to eek the most value out of points and miles is more work than the average consumer likely wants to put into their credit card rewards,” Dull says.
Travel rewards, which came in second place, are a better fit for a certain kind of rewards seeker.
“Points and miles are a great motivator for people who are aspirational, who get excited about working toward a special prize,” Murray says. “When the prize is a reward for spending how they would anyway, all the better. But not everyone is willing to wait for points to build to a certain redemption level.”
Consumers care more about rewards than other card benefits
We asked consumers which factors they consider when choosing which card to apply for. For many, it’s all about the rewards: 46% of respondents said rewards are a deciding factor when picking a card. And the sign-up bonus (rewards given after spending a certain amount after opening the card) is the top factor considered.
If applying for a credit card, what type of benefits would you consider?
- Sign-up bonus - 44%
- Trip cancellation/trip interruption insurance - 22%
- No foreign transaction fees - 23%
- Return protection (guarantees you can return an item if merchant won’t) - 24%
- Purchase protection (theft/damage) - 35%
- Price protection - 26%
- Other - 2%
But low APR remains the most important factor
While rewards are important to consumers, they're not nearly as important as a low APR. This is a financially responsible mindset, as carrying a balance and paying interest charges cancels out rewards earned.
The holiday season is rewards-redemption season
Perhaps it’s all the presents they need to buy, or maybe all the traveling they need to do — but consumers are far more likely to cash in their rewards in the last quarter of the year:
What’s the most likely time you’d redeem your credit card rewards?
- January - March - 12%
- April - June - 10%
- July - September - 22%
- October - December - 32%
Expert tips on getting the most out of your rewards
To avoid losing your points to expiration (and to avoid letting them languish, unused, in your account), follow these expert tips:
- Use a rewards-organization tool: Decker suggests AwardWallet, but there are plenty of others. “Using a tool like AwardWallet can give you alerts about when your points will expire so you can use them or make a qualifying action to renew them,” he says.
- Maximize flexibility: Rewards systems like Chase Ultimate Rewards and American Express Membership Rewards allow you to choose between redemption options that include cash back, travel and gift cards. “The marketplace appears to be trending toward multiple-option rewards that give users the choice of points, cash or even experiential rewards such as access to VIP events,” Murray says.
- Consider consistency: Some cards offer a flat rate of return on your spending (for example, 2 points per every dollar spent), rather than various returns on different purchase categories (for example, 3 points on dining, 2 points on travel and 1 point on other purchases). “When it comes to earning rewards points, flat-rate unlimited rewards points credit cards are by and far the most user-friendly,” Dull says. “They don’t require keeping track of, or activating, bonus categories, instead offering the same rewards rate on every purchase.” Redemption on flat-rate cards is usually simple as well (think statement credits). While you won’t see the high returns you will with more complex programs, you’re less likely to be overwhelmed — and probably less likely to be part of the 30% of U.S. consumers who let their rewards expire.
Our data was gathered in a Google Survey of 2,500 U.S. consumers, conducted between June 28 and July 1, 2018. Google Surveys makes use of the inferred demographic and location information to employ stratified sampling by distributing the surveys based on the targeted audience to its publisher network and/or smartphone (Android and iOS) users. A full description of the Google Surveys methodology can be found here.
Editorial Note: The information related to Starbucks Rewards™ Visa® Card has been collected by Credit Cards House and has not been reviewed or provided by the issuer of this card.
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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.