Industry News

13/10/2011 - Merchants and consumers are still using credit cards, but today's economy has changed the way they access their credit card rewards, Time magazine reports. More consumers have redeemed their rewards this quarter thus far, and nearly 40 percent of those cardholders are transferring their cash back rewards into statement credits. Additionally, 23 percent are depositing their cash rewards into savings accounts. The news source cited the Capital One Rewards Barometer.

With the holiday season approaching, a number of consumers are also turning their credit card rewards into gift and travel opportunities. Approximately 55 percent of respondents in the Capital One study said they would buy gift cards for holiday presents with their rewards points, according to the publication.

In most cases, cash back credit cards offer roughly 1 percent back on all purchases, but some offer rewards as high as 5 percent, although these cards are harder and harder to find.

According to Consumerism Commentary, a number of cash back reward credit cards stand out above the rest.

The Chase Freedom Visa and the Citi Dividend World MasterCard, for example, offer 1 percent cash back on all purchases and a rotating 5 percent cash back on different categories of purchases throughout the year, says the website. The Blue Cash Everyday card from American Express offers tiers of cash back rewards, such as 3 percent cash back on supermarket purchases, 2 percent cash back on gas and department store payments and 1 percent back on all other purchases.

The Discover More card is ideal for merchants and consumers who plan to make many purchases through credit, as the first $3,000 in purchases earn 0.25 percent cash back, but purchases after that total earn 1 percent. Additionally, the card comes with a zero percent introductory offer and no annual fee, according to the site.

Time advises consumers and merchants to truly consider their lifestyles and financial needs when selecting a credit card. Some cards offer top reward programs but high annual percentage rates, which are ideal for users who pay off their balances each month. Other cards offer low APRs but the rewards are significantly less. These credit cards are typically better for consumers who carry a balance month-to-month, as fees will be far lower.