Credit card rewards are slowly becoming way less rewarding — what’s behind that distressing trend

Vawn Himmelsbach

Sat, Jun 28, 2025, 9:15 AM 5 min read

Credit cards are popular with Americans — and so are the points, rewards and perks that come with them. That’s why some Americans devote time and energy (and spending) to optimize multiple rewards programs and claim rewards they wouldn’t otherwise be able to afford, such as flying business class.

The number of credit card accounts in the U.S. has increased steadily over the past 15 years; in 2023, 82% of adults had a credit card.

About half of cardholders carry a balance and, in the first quarter of 2025, Americans were carrying a near-record total of $1.18 trillion in credit card balances.

But economic uncertainty and pending legislation are about to change the rewards landscape — and not for the better.

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Rewards have played a part in the growth of credit cards (and debt) by helping credit card providers attract and retain customers.

“The reward point functions as an alternative currency with real economic value, yet it continues to carry aspirational and emotional significance,” So Yeon Chun, an associate professor of technology and operations management at INSEAD, recently told Business Insider.

“In other words,” he said, “rewards have become a dual-purpose behavioral currency: A tool for economic relief and a channel for emotional and symbolic value.”

Redeeming rewards “can have an outsize effect on satisfaction” on cash-strapped consumers, according to Bain & Company.

A few years ago, rewards redemption was a “routine episode, or interaction that fulfills a need, unlikely to faze customers,” according to the global management consulting firm. “But it has since become a ‘moment of truth’ — an episode with a high likelihood to delight or annoy, depending on how well the credit card provider executes the end-to-end process.”

At the same time, rewards have economic value that consumers are using to make day-to-day purchases and cover necessities.

“Most consumers, including middle-income earners, now use rewards not just to manage spending, inflation or debt, but also to preserve lifestyle,” Chun told Business Insider.