Cardholders Favor Cashback Rewards Over Points or Miles

Consumers have shifted away from credit cards that offer points, miles and perks, opting instead for cashback rewards and lower-fee options as they face financial challenges, according to J.D. Power.

The US Credit Card Satisfaction Study revealed 58% of cardholders use cashback cards, while only 31% use points and miles cards and only 11% use value cards, such as credit-building cards with no rewards.

Credit card users have also become increasingly dissatisfied with the benefits provided by their cards, with only 25% reporting that the overall perks of their card improve their lifestyle.

According to the report, the trend away from points and miles cards is consistent with a continued decline in financial health among credit card customers as consumers are now choosing cashback and value cards to enable them to incur lower or no annual fees.

The report found that more than half (54%) of cardholders are now classified as ‘financially unhealthy’.

Meanwhile, the percentage of ‘financially unhealthy’ cardholders that use points and miles cards has decreased from 31% in 2023 to 27% in 2024 with concurrent growth in use of cashback cards.

Consumers also have less disposable income to spend, which is evident as they are spending $103 less per month, on average, than they were in 2023.

In addition, for the second consecutive year, 51% of cardholders are carrying revolving debt and the average interest rate for new purchases has increased from 14.6% in 2023 to 15.6% in 2024.

John Cabell, managing director of payments intelligence at J.D. Power, said:  “Cardholders are facing mounting day-to-day financial pressures, which are showing up in the form of high levels of revolving credit card debt, declining levels of financial health and a migration away from points/miles cards.”