Industry Report on Benefits of Credit Card Rewards

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Last updated on April 13th, 2023

Credit card rewards are one of the most enticing reasons why consumers consider applying for a new credit card. A report from the American Bankers Association highlights the impressive benefits credit card rewards offer – not only to consumers across both income and credit score spectrums, but also to merchants.

New Report Sings Praises of Credit Card Rewards

A new report from the American Bankers Association (ABA) highlights the benefits of credit card rewards. The study highlights the critical role credit card rewards play in business, with both merchants and consumers benefiting from rewards programs.

The ABA report states that “(credit) card rewards are accessible, valuable, and well-understood by consumers, across all income levels.” One of the study’s surprising findings was the lack of correlation between income, credit scores, and revolving card balances.

The report highlights a misapprehension from some experts that credit card rewards act like a “reverse Robin Hood subsidy” that benefits wealthier Americans more than those with lower income levels. Instead, the findings indicate that a person’s risk score is a better indicator of their likelihood of carrying a balance rather than their income.

Merchants Benefit from Rewards as Much as Shoppers

The report also argues, “credit card reward programs benefit consumers of all incomes as well as merchants who accept credit cards. Through higher purchase values, increased security, lower risks, and avoided costs of cash, merchants benefit substantially from the existence of credit card rewards programs.”

Interestingly, the ABA study also indicates little evidence of long-held beliefs that merchants pass on the additional costs of credit card acceptance to consumers. This finding results from the overall benefits of wider credit card acceptance, which often easily offsets the costs of accepting more expensive payment networks like American Express.

For more information on the American Bankers Association, or to read the report’s full findings, click here.

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About: Cory
Cory Santos

Cory is's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. Cory holds academic degrees in both the U.S. and U.K. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.

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