Credit card rewards were once a ticket to premium travel, luxury experiences, and aspirational purchases. Increasingly, however, consumers are using those same rewards to offset everyday costs like groceries and gas, signaling a shift in how households are managing their finances.
That’s according to new research from USAA, which found that consumers are not only using points for everyday expenses, but nearly a third of respondents said they’ve redeemed rewards as soon as possible instead of saving them. Many shoppers use points to directly pay for purchases, while roughly 42% said they redeem their points monthly to lower statement balances.
Younger consumers are driving this trend, with nearly three-quarters of younger respondents saying they use points monthly or redeem them as quickly as possible.
The Shifting Redemption Trend
This shift in rewards redemption is likely a reflection of the continued economic pressures facing consumers. As inflation has increased and interest rates have remained elevated, many consumers have found themselves caught in revolving debt cycles that can quickly become more difficult to manage.
This financial strain increases risks for lenders and is one reason many leading issuers have focused their credit products on more financially stable, affluent cardholders. For example, Amex and Chase have both raised annual fees on their top-tier cards while enhancing rewards programs with exclusive benefits and premium perks.
Serving the Segment
This expansion and customization reflect a broader trend among leading issuers, which are increasingly using credit cards as gateways to ecosystems featuring shopping, travel, and personalized financial services.
However, these programs are not exclusively designed for the upper consumer echelon. For example, Capital One Shopping is an app and browser extension that allows shoppers—even those who aren’t Capital One customers—to access targeted deals on products and services. This positions the issuer as an intermediary between merchants and customers before transactions even take place.
For its part, USAA is launching a new card lineup aimed at consumers who use rewards for essential purchases. Among the new lineup’s benefits are higher cashback rates for everyday spending categories such as groceries and gas.
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