Why the credit card companies like reward programs

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When I was a kid, I loved to go to Chuck E. Cheese and play their games after eating. I really liked how you could earn tickets for your play that could be redeemed at their “gift shop”. It didn’t matter to me that my parents were essentially spending $10 for a cheap little glow-in-the-dark key-chain. I just wanted to play more, to get more tickets and more prizes!

There is a similar “game” going on out there amongst the credit card companies, with their reward programs and incentives for spending.

A recent ABC news report on credit card reward programs stated that folks with incentive-based credit cards spend twice as much as those without such cards. They also reported that 41% of those with a reward balance, never redeem it.

Although this is common sense for many, beware of your card’s rewards dictating whether or not you will make a certain purchase or not.

These incentives work best for the cardholder who pays off their balances monthly and uses the card to purchase needed products and services.

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