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Redeeming Credit Card Rewards, or Not

Posted on July 25, 2017

A shocking number of Americans have never redeemed credit card rewards. What’s going on?

A new study from Bankrate found that around three in 10 credit cardholders (31%) have never redeemed credit card rewards.

The survey found that cardholders typically gravitate to one extreme or the other, redeeming their rewards points/miles frequently (38% did so within the past six months) or not at all.

"Credit card rewards don't usually gain value over time," said Bankrate.com credit card analyst Robin Saks Frankel. "In fact, they're more likely to lose value as companies require more points or miles for the same perks. Your best move is to cash them in regularly."

The most popular redemption is cash back; 49% who have used credit card rewards said they most recently exchanged their rewards points for this purpose.

Airline tickets were a distant second (17%), followed by gift cards (12%). Millennials (18-36 year-olds) were much more likely to have chosen cash back than older adults (67% vs. 43%).

Millennials are Learning to Love the Card

The conventional wisdom has been that millennials are averse to credit cards, but that seems to be changing.

Older millennials – 27-36 year-olds – are now more likely than Gen Xers to possess a credit card (61% to 56%). Baby Boomers (64%) and the Silent Generation (68%) are a bit more likely to have a card.

Overall, about 1 in 4 cardholders is willing to pay an annual fee. Millennials are much more receptive than other age groups (37% to 24%).

"The credit card market is very competitive right now, so if you're not happy with a fee, you can either shop around to find another card that doesn't have one or you can see if the issuer is willing to waive the fee to keep your business," Frankel added.

CreditCards.com recently reported that more than 80% of cardholders were able to get an annual fee waived or reduced just by asking.