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Credit Cards
Cash-Back Rewards Seem Like Free Money, but There’s a Catch
Something every purchaser should be aware of
Credit card cash-back rewards have become an increasingly popular incentive offered by banks to attract customers. Cash-back rewards typically range from 1% to 3% of the amount spent by a cardholder, which is then returned to them as a form of incentive.
For example, if Jim’s bank offers him a 2% cash-back reward on all purchases, he would receive $1 back after spending $50 on groceries and $20 after purchasing a $1000 television set, as long as he uses his credit card for the transactions.
While cash-back rewards help you and me save money on purchases, the question remains, who bears the cost of these perks?
Banks Don’t Bear the Cost of Cash-Back Rewards
In the United States, credit card payments accounted for . With a total consumer spending of , Americans made purchases worth $4.2 trillion using their credit cards.
