LAS VEGAS – The Nevada Bankers Association (NBA) and its member banks are promoting the overall value of credit card rewards, citing a recent report released by the Electronic Payments Coalition (EPC).
According to NBA President and CEO Phyllis Gurgevich, the report examines how American consumers, especially lower-income consumers, utilize the rewards they earn from using their credit cards and how recent government proposals restricting card issuers’ ability to offer reward credit cards would harm cardholders of all incomes. The EPC study found the share of credit cards offering rewards is nearly identical for all kinds of cardholders, regardless of their income, showing they earn rewards at virtually equal rates.
Key findings from the report include:
- Rewards are for everyone. Since 2020, rewards card ownership has grown the fastest among low- to moderate-income (LMI) income consumers. Currently, more than two-thirds of LMI cardholders own a rewards card. This result illustrates that rewards cards are popular among low-income households, and that reward programs do not exclusively serve upper-income customers.
- Rewards supplement consumer income. All cardholders receive a boost to income from their rewards. Many cardholders save up rewards over the course of months to supplement holiday and back-to-school shopping. In fact, total rewards savings in 2023 accounted for 23% to 32% of planned holiday purchasing. Consumers also use their rewards to supplement everyday expenses, with some studies suggesting consumers now rely on their rewards cards more than ever in the face of rising inflation.
- There is no cross-subsidy or so-called “Reverse Robin Hood.” Rewards redemption rates are similar across income groups, suggesting that each income group is taking advantage of their rewards at the same level. Moreover, rewards earned and redeemed are nearly identical across income segments after controlling for spending, directly countering the “Reverse Robin Hood” argument that low-income cardholders somehow subsidize rewards for wealthier consumers.
- Rewards are especially important to lower-income consumers. Low-income consumers deeply value credit card rewards. LMI accounts are most likely to redeem rewards for cash, implying that this income segment uses rewards for everyday spending needs. Rewards have a significantly larger financial impact on LMI cardholders than higher-income cardholders. Removing or reducing reward programs would negatively impact low-income households more than any other income group.
The EPC study was conducted during the first quarter of 2024 among EPC members and represents more than half of the credit card market as measured by purchase volume. The study excluded cobranded, small business, and international rewards cards. Income segments were approximated using the Community Reinvestment Act income bands.
About Nevada Bankers Association
NBA is the united voice of Nevada’s diverse banking and trust company industry. Members are dedicated to providing the best financial products, services and resources to drive and support economic growth, job creation and prosperity throughout Nevada. Visit www.nvbankers.org.
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