How Are Consumers Utilizing Credit Card Rewards During the Pandemic?
With the United States economy still suffering at the hands of the COVID-19 pandemic, many consumers have had to grow more savvy in order to weather the storm. According to a recent survey commissioned by the peer to peer payment service PayPal, it seems that, for some Americans, this may include tapping their saved credit card rewards.
First, 29% of survey respondents report turning to their banked credit card rewards to help subsidize their budgets, using them for practical purchases and essentials. Similarly 30% said that their rewards were useful for everyday spending. This figure was even higher for certain purchases including groceries (40%), gift cards (37%), and clothing (34%). However, despite these assertions, 39% of those surveyed said they were unsure about their current rewards balances.
Also notable is that, while shoppers may be utilizing their rewards to help themselves through this crisis, there’s also a desire to support small businesses. In fact 74% of credit card customers surveyed said they’ve been making an effort to shop at small and locally-owned businesses as of late. Additionally 24% stated that they’d choose to use their rewards for a purchase from a small business if their points were on the verge of expiration.
Commenting on the survey’s findings, PayPal’s VP of consumer marketing Jill Cress said, “More and more people across the country are turning to their credit card rewards as a helpful and easy way to make their dollars go further, and in the current environment, two-thirds of Americans now view these rewards balances as a way to buy the things they need such as groceries and other essentials.” She added, “With travel and luxury items still less of a priority for many right now, our research shows that people are instead tapping into their rewards balances to support small businesses in their community and to give back to causes.”
The survey’s results actually correspond perfectly to efforts card issuers have made to support their customers during this time. Some of these promotions include Chase offering bonus categories for grocery purchases as well as offering a statement credit on Instacart Express memberships. Elsewhere, Capital One has forged a partnership with Uber Eats that will give Venture and Savor cardholders 5% back on orders from the delivery service through January next year. Additionally, speaking to consumers’ desire to support small businesses, American Express recently introduced a limited time offer where cardholders can earn a $5 statement credit when they spend more than $10 at an eligible small business. This offer can be used up to 10 times, for a total benefit of $50.
Meanwhile PayPal’s interest in credit card rewards comes as the company continues to expand its Pay with Rewards program. As the name implies, this allows customers with credit cards from a growing list of partners to make PayPal purchases using their rewards points. Unfortunately, the exchange rates for the Pay with Rewards program aren’t always favorable for consumers. For example, Amex Membership Rewards points are valued at 0.6¢ per point whereas The Points Guy suggests that MR points could be worth 2¢ each when used for travel.
Overall, considering the bad reputation that credit card issuers typically carry, it’s interesting to see that some consumers are finding benefit in their rewards during these difficult times. Of course, one aspect of credit card rewards not included in the survey is whether or not these shoppers incurred interest on their purchases — something that could easily erase the perks that come from rewards earned. Therefore, while banked points can certainly come in handy, it’s always worth remembering that credit cards should be used responsibly.