Cash Back Popular Choice for Reward Credit Cards
A survey conducted mid-January found that 45% of all offers for reward credit cards in 2011 were of the cash back variety. It’s no surprise that cash back is a very popular option for reward cards — everyone can use cash. Other popular reward cards are for gas savings, airline points, and amusement park dollars, but those are more niche markets where cash is universal.
The survey took a look at 19 different credit card issuers with 50 different cash back reward cards. It was reported that the most common percentage of cash back awarded is at about 1%. However, rates can vary from card to card and offer to offer from less then half a percent upwards to 6%. Most of the card cash back offers have a tiered cash back program, with purchases at supermarkets and grocery stores giving back a higher percent, most often about 3%. Gasoline purchases also generally qualify for a higher cash back percent, falling in around 2%. Travel purchase rewards also tend to be a bit higher then the average percent for the cash back on each card.
It’s important to know your card’s particular cash back rewards program to maximize the benefits. For example, Chase Freedom card has rotating categories with higher percentages in cash back. One month card holders may benefit more with grocery purchases, another with restaurant spending. Many cards also limit the spending amounts in certain categories such as travel. It was shown that most cap the cash back on purchases between about $3000 – $5000 for vacation and travel charges. The American Express Blue Cash Preferred card comes in with the highest cash back rewards at 6% for some purchases, like supermarkets.
Programs vary widely in percentages, but it appears from the results of this survey that cash back is still the most popular way to go.