Brits become savvier about reward cards
Consumers are better off by £141 a year thanks to reward cards, according to new research.
The annual saving has risen £25 since 2011 and 50% of UK adults now have at least one credit card that rewards them with cashback, retail vouchers or travel awards for everyday spending, reported American Express.
Some 24% of credit card holders say they have increased their spending on cards over the past year, with the average now £402 a month - up from £335 a year ago.
Two-fifths of those who have upped their spending say they feel more comfortable using their cards for everyday spending, while one-third believe they can spend more because their personal circumstance have improved.
More than two-fifths (43%) of consumers favoured cashback as a reward, while 40% preferred retail vouchers and 23% chose hotel stays/upgrades.
Embracing the benefits
Nicholas Stefanovitz, vice president of consumer cards UK at American Express, said: "This year's results truly demonstrate that Britons recognise and are embracing the benefits of reward cards. Using a card that gives something back is becoming a part of everyday life and our research demonstrates a step-change in how people spend their money."
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Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.