Many consumers use credit cards for everyday spending. If you’re using credit cards, it’s wise to use ones that earn rewards, and there are plenty of rewards credit card options to choose from. A recent study by The Motley Fool Ascent found that most credit card users prefer credit cards that offer cash back rewards. Should you prioritize credit cards that earn cash rewards?
15% of Americans want to earn more cash back and points
The Motley Fool Ascent polled 2,000 U.S. adults to learn more about Americans’ credit card habits and preferences. The Generational Credit Card Habits study examined how different generations use credit cards, what types of rewards they prefer, and what features they look for when choosing a new credit card.
The study found there are generational differences. Respondents were asked to explain why they chose their most recent credit card. A whopping 48% of Generation Z respondents were focused on establishing credit, which makes sense since they’re younger and likely have little to no credit history.
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Just 15% of baby boomers cited optimizing rewards as their reason for getting their most recent credit card, while only 7% of Gen Z had the same answer. However, 15% of study respondents across all generations got a credit card to boost their cash back and reward points.
56% of Americans prefer cash back credit cards
Americans use a variety of credit cards, but one kind of rewards credit card topped the list. The study found that 56% of Americans have at least one cash back credit card in their wallets.
Why might U.S. consumers prefer cash back credit cards to other rewards cards? The variety of cash back cards available may be one reason. Consumers can choose flat-rate rewards cards that offer a set percentage of cash back for all purchases made with their card. Some people prefer this card type because it requires little effort to earn rewards.
But there are other credit cards with cash back rewards. Some credit card issuers have cards with bonus categories. Cardholders can earn rewards at a higher rate when making certain types of purchases. This kind of card can be a win for consumers who spend significant money on everyday essentials in eligible spending categories.
Finally, many Americans like cash back cards because they make redeeming their rewards easy. Many cash back credit cards let cardholders redeem their earned rewards for cash back or statement credit. Sometimes, simplicity is best.
Should you choose a cash back rewards card?
If you’re looking to apply for a new rewards credit card, you may need help deciding which type is right for you. Should you choose a card that offers cash back rewards?
Cash back cards might be an option to explore if you want to earn cash back rewards that you can deposit into your checking account or redeem as a statement credit to your credit card account. Earning cash may feel more rewarding.
But before getting a credit card, review the features and benefits so you know what to expect. Remember to review the annual fee and any other card fees, too. You should also verify how the card earns rewards and the ways you can redeem your rewards.
If you prefer to redeem your rewards for travel, a travel rewards credit card may be a better fit. Check out our list of the best rewards credit cards to learn more about your options.
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