Credit Card Rewards: How a Recession Could Impact Your Perks

Updated May 26, 2025

For many Americans, credit card rewards have become a way of life, ⁤offering tantalizing perks like luxury travel and exclusive access. Some cardholders have snagged lay-flat seats⁣ on planes or presale tickets to sought-after‍ events like Taylor SwiftS Eras tour. Others enjoy more everyday benefits, such as discounts at restaurants.

The appeal of spending money to make money has fueled a cottage industry centered on credit card rewards. Consumers gamify their spending, strategically choosing which cards to use at specific stores⁣ to maximize points. These rewards have become a consumer product, driving spending that might not otherwise occur.

Though, the credit card reward system has yet to face a significant recession. While the pandemic-triggered downturn paradoxically boosted rewards as companies tried to retain customers, a more traditional recession could pose challenges. Some airlines are already increasing annual fees and restricting perk usage. Matt Schulz,chief‍ consumer finance ⁣analyst at LendingTree,said rewards can be lucrative ⁤if managed well,especially in good times. Though, he cautioned that juggling multiple cards to chase miles and points can become problematic if job loss or a medical emergency occurs.

credit card use has surged in recent years, fueled by technology. A 2023 federal Reserve survey⁣ revealed that 82% of Americans have at least one credit card, up from 76% ⁤in 2014. Outstanding credit card ‍debt reached a record high of about $1.2 trillion in the ⁢fourth‍ quarter of 2024.

Many cardholders enjoy accruing ⁢points ⁢and rewards through everyday spending. Some “churn” cards, opening new accounts to earn ⁣bonuses and then letting⁢ them sit dormant. An Ipsos ⁢poll from May 2024 found that 71% of Americans have a rewards credit card, and 80% value the rewards they receive. Over a third said they would spend less on credit cards if rewards weren’t offered, and a similar share felt their spending increased when using credit cards instead of cash or debit⁢ cards.

So Yeon Chun, an associate professor at INSEAD, said rewards have become a dual-purpose behavioral currency, offering both economic relief and emotional value. Companies have capitalized on this desire, with credit ⁤card reward sign-up bonuses hitting ⁣$326 in 2022, a nearly 20% ⁤increase from 2019, according to a Consumer Finance protection Bureau report.Since 2020, about 91% of credit card spending has been on rewards cards, with more cardholders with lower⁢ credit scores using rewards cards.

This reliance⁣ on rewards is causing some users trouble. The Ipsos poll found that 20% of 18- to 34-year-olds use rewards to pay for things they couldn’t otherwise afford, the highest⁢ share among age groups.At the same time,⁣ this group was the least likely to pay off their balances each month.

“Rewards can be an amazing thing and‍ can be really lucrative if you manage it, and that’s certainly easier to do in good times,” Matt Schulz, the chief consumer finance analyst at LendingTree, says. “But if you have a half dozen credit cards as you’re chasing miles and points and all of a sudden you find yourself without a job or there’s a medical emergency or your income is reduced, it can become a real challenge.”

What’s next

As economic uncertainty looms, consumers should⁢ be aware of potential changes to credit card reward programs and manage their spending accordingly. The future ‍of credit card rewards and⁣ their impact on consumer behavior remains to be seen.