Here's Another Reason To Choose Credit Cards Over Debit Cards

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Photo: Flickr / Pondspider

As credit lenders push to draw new fiscally responsible customers, cash back credit cards are having a heyday, reports Bankrate.com. “Unlike debit card rewards, which declined sharply over the past year, credit card rewards are still alive and well,” said Greg McBride, CFA, senior financial analyst for Bankrate.com.

“Not only were credit cards exempt from debit swipe fee reform, but the ideal rewards card candidate is a consumer that uses the card frequently but pays the balance in full at month-end.

This high-volume, loyal customer with very low risk of default is attractive to card issuers, who offer cash-back rewards and introductory bonuses to incent cardholders for swiping their plastic.”

Consumers stand to benefit too, as rewards credit cards pose less risk of fraud and pack plenty of perks. 

In examining 50 cash-back credit cards from 19 large U.S. issuers, the site found nearly half of the cash-back cards (48 per cent) pay 1 per cent cash back from the first dollar of spending—up from 44 per cent last year. 

Even better, 82 per cent of the cards lacked annual fees, while 67 per cent have no expiration dates for their rewards, up from 50 per cent in 2011. 

Here are more interesting stats from the survey: 

-44 per cent of surveyed cards featured introductory bonuses.

-Most cash-back rewards started at 1 per cent, though the site suggests big spenders should look for rewards starting at 2 per cent. 

-Few (12 per cent) of cards had tiered payouts based on spending. Most started below 1 per cent and were capped at the same amount. 

-Cash-back cards with expiration dates typically ended after three or five years.

-The majority of cards with introductory bonuses could be earned by reaching a spending threshold within a few months.

Bankrate didn’t cite a clear year-over-year trend among the cards with introductory bonuses except that many “require exponentially more spending to qualify.”   

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This story was originally published by Bankrate.

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