Credit card rewards provide value to consumers and merchants alike, including lower-income consumers. The American Bankers Association (ABA) examined rewards cards and their value to various participants in the credit card market, including merchants and consumers, segmented by income and credit score.
The analysis, combined with other studies, finds that card rewards are accessible, valuable, and well-understood by consumers, across all income levels. Most lower-income cardholders use a rewards card and receive significant benefits from rewards programs, as do cardholders with moderate and higher incomes. Further, small businesses receive particular value from accepting rewards cards because they are associated with higher transaction amounts than cash-based purchases, and they also benefit from the improved transaction security, reduced fraud and nonpayment risk, and lower cost of handling cash that accompany electronic payments use.
ABA’s study will demonstrate to policymakers that the value of credit card rewards to consumers of all incomes, and that it will demonstrate that price controls (such as interchange or interest rate caps) would harm all consumers, especially those with lower incomes.