In October 2018, news broke of a lawsuit being filed by some of America's biggest and most popular retailers. The short version is that businesses like Target and Amazon don't like paying credit card companies the slightly higher rates that fund consumers' rewards programs. Now, credit card companies are wondering if those programs are even worth it to them.
Shoppers, of course, love rewards programs. They can be excellent ways of funding everything from a dream vacation to a free cup of joe. But as Chavie Lieber writes for Vox, those coveted premium rewards cards may be an endangered species. The reason? American consumers are actually too good about paying up on time.
Sources told Lieber that credit card companies are displeased with the number of customers who pay their balances promptly and in full each month. That denies the credit card companies late fees and higher interest rates, which drive their profits. Another portion of customers "game the system" by paying off one card with another to earn points, or sign up for points-rich cards only to abandon them later, with no harm to their credit score.
It's worth noting that these are the rules set out by credit card companies regarding their own product. Customers are using these cards exactly as intended. The scope and number of credit card rewards programs may contract over the next several years, which is all the more reason (especially if you rely on rewards) to keep up or intensify your saving and investment strategies.