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Consumers take to cash-back rewards cards

22/02/2012 - By Louis Georgakakis

Consumers are favoring credit cards that offer cash back rewards programs.

Tag: Credit Card Processing

Enhanced cash-back rewards programs are successfully drawing consumers in, a study shows. The survey conducted by Bankrate researched 50 cash-back cards from the 19 largest issuing companies and revealed that cash-back rewards cards were the most popular redemption choice for 44 percent of cardholders at the end of 2011.

Consumers cite the offer of free money as the most appealing reason for earning and redeeming credit card rewards. As a result, 43 percent of credit card issuers offered cash back as an incentive program last year, up from 27 percent in 2008.

The number of cards that pay at least 1 percent cash back increased to 50 percent last year, and some cards offer even more.

"If you find yourself earning less than 1 percent, or if you’re paying an annual fee, it’s time to shop around," Greg McBride, said senior financial analyst with Bankrate.com, according to The New York Times.

An uptick is rewards programs can be explained by two factors. One is the Durbin Amendment, which has credit card companies offering benefits for customers not using debit cards for payment processing. The other is the consumer demographic - credit card rewards customers are low-risk because they tend to use the card frequently to earn cash back and pay off the balance, the source reports. 

Articles written by ChargeNational.com's editorial team. For more information, click here.

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