With a surge in gas prices, travel costs, groceries, and rent, US consumers are adopting cost-cutting measures. Many are turning to credit card rewards programs as a needed windfall, especially cards with cashback offerings.

Why should we care?
With the greater urgency consumers feel during inflationary periods to stretch their money—and in a bear market, too—banks have the choice to either scale back their rewards programs to boost their bottom dollar, or compete through more attractive rewards programs and attempt to poach other banks’ clients. According to a survey by The Harris Poll for NerdWallet, 25% of US consumers redeemed credit card points to pay for essential goods and services, and 62% of those surveyed said inflation has caused them to change how they use credit cards over the past year. Rewards points are a keystone to these consumers’ adapted habits because banks are, in essence, offering digital cash in exchange for use of their credit cards. “Loyalty points are more important than ever to consumers and are probably the best way to hedge inflation, with selective use of cards,” said Brian Riley, Director of Mercator Advisory Group’s credit advisory service. Leading cashback providers like Amex, Citi, and Chase may face growing pressure to recalibrate their rewards programs, or else face droves of clients switching to a competitor.