Americans Pivot Credit Card Rewards Toward Daily Essentials

Americans are shifting their credit card reward usage from luxury travel to everyday essentials like groceries and gasoline. According to a survey by USAA Federal Savings Bank, over 35% of respondents now redeem points for daily expenses, while 79% used rewards as statement credits in the last six months. This trend is driven by persistent inflation; grocery costs have risen more than 6% since mid-2023, and gas prices increased by roughly 30 cents per gallon, while inflation-adjusted wages grew only 1.4% annually.

Financial institutions report a significant surge in this behavior. Bank of America Corp. found that engagement with its cash-back feature tripled in June compared to the previous year. The shift is supported by the growth of pay-with-points options at retailers like Amazon.com Inc. Younger consumers, specifically Gen Z, are the most likely to redeem rewards immediately once they become available.

The Consumer Financial Protection Bureau reported that Americans earned $47.5 billion in credit-card rewards in 2024. Industry leaders note that gasoline has become the second-most popular redemption category as households seek to make the most of their money and prioritize practicality in the face of rising costs.