Credit cards are popular with Americans — and so are the points, rewards and perks that come with them. That’s why some Americans devote time and energy (and spending) to optimize multiple rewards programs and claim rewards they wouldn’t otherwise be able to afford, such as flying business class.
The number of credit card accounts in the U.S. has increased steadily over the past 15 years; in 2023, 82% of adults had a credit card.
About half of cardholders carry a balance and, in the first quarter of 2025, Americans were carrying a near-record total of $1.18 trillion in credit card balances.
But economic uncertainty and pending legislation are about to change the rewards landscape — and not for the better.
Don’t miss
- I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 6 of the easiest ways you can catch up (and fast)
- Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now
- You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how
Consumers can’t get enough of credit card rewards
Rewards have played a part in the growth of credit cards (and debt) by helping credit card providers attract and retain customers.
“The reward point functions as an alternative currency with real economic value, yet it continues to carry aspirational and emotional significance,” So Yeon Chun, an associate professor of technology and operations management at INSEAD, recently told Business Insider.
“In other words,” he said, “rewards have become a dual-purpose behavioral currency: A tool for economic relief and a channel for emotional and symbolic value.”
Redeeming rewards “can have an outsize effect on satisfaction” on cash-strapped consumers, according to Bain & Company.
A few years ago, rewards redemption was a “routine episode, or interaction that fulfills a need, unlikely to faze customers,” according to the global management consulting firm. “But it has since become a ‘moment of truth’ — an episode with a high likelihood to delight or annoy, depending on how well the credit card provider executes the end-to-end process.”
At the same time, rewards have economic value that consumers are using to make day-to-day purchases and cover necessities.
“Most consumers, including middle-income earners, now use rewards not just to manage spending, inflation or debt, but also to preserve lifestyle,” Chun told Business Insider.
Consumers had amassed reward balances of more than $33 billion by the end of 2022, according to the Consumer Financial Protection Bureau (CFPB).
And those rewards are “incredibly popular,” according to the Ipsos Consumer Tracker, summing up the results of a 2024 poll. Seventy-one percent of Americans have a rewards or cashback credit card, and about one in five younger Americans (ages 18-34) use the rewards for experiences they “couldn’t afford otherwise.”
But it also found that over a third of respondents said they wouldn’t spend as much on their credit cards if rewards weren’t offered.
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
Dark clouds on the rewards horizon
Despite their popularity, economic headwinds may cause a reduction or restructuring of rewards programs similar to what happened during the Great Recession, when 0% balance transfer programs were cut back dramatically.
While economic prognosticators disagree as to how likely we are to enter a recession in the near term, continued near-record levels of economic policy uncertainty are having much the same effect on business decisions as a recession.
For instance, airline reward programs have already started to lose value — and other perks may soon follow.
“In the more typical downturn, we are likely to see a different kind of shift. Issuers will preserve the appearance of program stability while quietly reducing average value,” Chun told Business Insider. “Redemption thresholds may rise, expiration timelines may tighten, bonus categories may rotate more frequently, and access to high-value redemptions will become more conditional.”
Even more concerning to consumers who’ve racked up rewards, those programs may disappear altogether in the U.S. — despite their popularity.
Senator Dick Durbin, a Democrat from Illinois, and Sen. Roger Marshall, a Republican from Kansas, are driving efforts to move the Credit Card Competition Act through Congress.
The bill would reduce interchange fees, which are the fees charged to merchants that allow them to accept credit cards. These fees are a source of revenue for credit card companies and help to fund rewards programs. Some major airlines have already warned that if the legislation passes, frequent flyer programs could disappear.
At the same time, credit card providers can devalue your rewards at any time (which can also happen naturally with inflation) — so accumulating and hoarding points may not be in your best interest.
What to read next
- Financial aid only funds about 27% of US college expenses — but savvy parents are using this 3-minute move to cover 100% of those costs
- Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
- How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
- This is how American car dealers use the ‘4-square method’ to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs
Stay in the know. Join 200,000+ readers and get the best of Moneywise sent straight to your inbox every week for free. Subscribe now.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
