Who Benefits the Most From Cash Back Rewards?

Cash back credit cards are a great way to earn rewards on your purchases while building excellent credit. Anything from booking flights to buying pet toys can earn you cash in your pocket. However, not everyone takes full advantage of these reward programs. A recent study by SoFi uncovered statistical data about the differences between buyers regarding who is and isn’t taking advantage of cashback credit rewards and how these buyers are spending their money. Factors like age, payment method, relationship status, and more can impact a person’s ability to save, spending habits, and whether or not they will take advantage of spending rewards.

How Much Can You Make in Cash Back Rewards?

Your cashback reward rate will be determined by the credit card services you choose to sign up with. You earn these rewards each time you make a purchase, which can be calculated in several ways. A flat rewards program will offer each purchase a flat rate percentage reward. In contrast, fixed category rewards cards can offer higher reward percentages for spending within specific categories such as travel or entertainment. Fixed category reward rates and category definitions are predetermined by the credit card company but are often higher percentages than flat-rate rewards. Finally, credit card companies can offer rotating category rewards which offer generous rewards in specific categories for a limited amount of time. Cash back rewards can be given as a check, a prepaid card, or an account credit. You could also receive your rewards in the form of points which could hold greater value over cash when redeemed through your credit card portal.

A recent study by SoFi uncovered data on cash back rewards for credit card users over a month. That study found that cash-back credit card users earned a median of $50 cash-back rewards per month. The study showed that Gen Z shoppers made the most cash-back rewards, with Boomers earning the least at only $20/month. The study explains that because Boomers generally have higher-paying jobs and more significant savings, they may be less inclined to maximize their cash-back rewards where possible. Gen X and Millenials earned $40/month and $50/month, respectively, revealing that age can significantly impact an individual’s likelihood to earn greater cash back rewards. However, age isn’t the only factor affecting an individual’s financial state; here are a few other factors SoFi uncovered in its cash-back survey.

Couples Save More

That’s right; if you’re in a relationship, you are more likely to save money than those who live alone. The SoFi study surveyed 1,205 people, 802 cash-back credit card users and 403 debit, cash, or app users. The survey found that “people in relationships were able to put three times more money into savings than single people.” Those married or living with a partner saved a median of $300/month, while those who were single, widowed, or divorced saved only $100/month. Being in a relationship could be a good way to consolidate spending and save money by sharing the financial responsibility of a household.

Payment Method

Not only does your relationship status impact your ability to save, but data shows those who use cash-back credit cards as payment methods are generally able to save much more than those who use debit cards, cash, or apps for payment. Debit users are “more than twice as likely to be unable to contribute to savings compared to cash-back credit card users.” Cash back credit card users may be able to save more month over month because they earn rewards for their spending. If you’re a debit, cash, or app user, you may be able to create a more healthy savings plan with the help of a group like SoFi that specializes in personal finance.

Everyday Spending

The SoFi study also uncovered gender and spending habits data from their survey respondents. In general, men tend to spend more money month-over-month than women on things like entertainment, their pets, and home décor. Most of these men surveyed are cash-back credit card users, but overall, the majority of respondents, whether male or female, would use their cash-back credit cards to pay for bills, entertainment, gas, and more. The survey even discovered that groceries were the purchase that brought people the most joy, and gas was the most regretted purchase overall.

Building Credit

Another aspect of the SoFi study gathered data on buyers’ credit. The study found that most cash-bak credit card users have Very Good or Excellent credit, while 12% more debit, cash, and app users had Poor credit scores. Substantial credit is essential for securing loans, purchasing a home, and making more life-long financial decisions. Because the rewards incentivize cash-back credit card users, they are more likely to use their credit cards and build good credit over time. Having an Excellent credit score can be highly beneficial to many looking for ways to improve their financial situation.

Maximize Your Rewards

Overall, utilizing a cash-back credit card can allow you to earn money while conducting your daily spending. Do your research to discover which cash-back credit card is best for you and how you can start earning rewards on your spending today. Be sure you can keep up with your monthly payments to continue to rack up those rewards month-over-month. You can visit SoFi to learn more about sustainable and beneficial personal finance.