Why are Americans not participating in credit card rewards?

The Points Guy commissioned a survey on Americans’ credit cards reward usage:

The survey was conducted by Princeton Survey Research, which interviewed 1,003 American adults earlier this month. From the half dozen questions asked about travel rewards, the survey turned up the following:

  • 67% of respondents said they do not have a credit card that offers travel rewards points or airline miles, and only 10% said they have more than one. If you have even a single travel rewards card, you’re already in a 2-to-1 minority.
  • A whopping 79% of travel credit cardholders said they have never transferred credit card rewards points to an airline or hotel loyalty program. (So, even among people who are earning travel rewards, most don’t know how to use them.)
  • One-third of credit cardholders don’t know if their card charges foreign transaction fees
  • 72% of respondents said they never check to see if credit card companies are offering new or better sign-up bonuses.

The Points Guy’s original headline is a bit misleading, (I don’t think you can draw the conclusion that Americans are unaware of credit card rewards just because they’re not participating in them) but if these numbers hold true to the general population, Americans are leaving a lot of money on the table.

One thing the post doesn’t mention that I’d be interested in is the total number of respondents who have credit/debit cards in general (i.e. credit/debit card usage regardless of whether or not it has rewards). My guess is that that total would be fairly high (at least 95%). If that guess is even close to accurate, that means there’s well over 50% of respondents that have a credit or debit card and are not receiving any kind of benefit from it (with the exception, of course, of delayed payment for purchases, in the case of credit cards).

It’s probably impossible to draw definitive conclusions from this survey, but it’s fun to speculate as to possible reasons why this is true. I’ve got three guesses:

1) Americans are generally aware of credit card points, but they’re generally unaware of sign-up bonuses (i.e. getting a large points bonus just for signing up for a card and meeting a minimum spend). Because of that, one point per dollar spent doesn’t sound like it’s worth most people’s time. Even if Americans are aware that it generally takes 25,000 miles to redeem for a flight, spending the $25,000 to get there sounds out of reach to most people.

2) Another guess is just pure, plain apathy. We’re reading studies all the time of how Americans are taking fewer vacations and are traveling less and less. If you’re not ever planning on taking a trip, who cares how many airline miles you have?

3) A fear of money and credit usage is keeping people from applying for credit cards. Studies also say that Americans’ fiscal knowledge is very very low.  When people find out how many credit cards I have, most of the time they’re first reaction is horror at what my credit score probably is. People’s lack of knowledge of how credit scores are actually established and actually work are keeping them from signing up for credit cards and thus participating in credit card rewards.

Those of us in the travel rewards game have a deep knowledge of how all of this works. But if we want to try and open this up to more people, we need to do a better job of meeting people where they currently are. You can’t teach someone to run before they can stand up. Perhaps those of us in the travel rewards game need to do a better job of giving people knowledge before giving them free flights.

 

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