Credit card users to ignore $152M in rewards

Now is the season of giving, receiving and buying as Americans ramp up their holiday shopping. That means customers will be racking up the numbers on their credit cards, and if they have a great rewards program attached, they'll be receiving presents long after the holiday season. However, millions of those rewards dollars shoppers are entitled to will be left on the table. As reported in a 2015 Harris Poll survey conducted for NerdWallet, Americans will miss out on nearly $152 million in credit card rewards this season.

Missing out on millions
About 1 in 8 Americans in the survey own a credit card, but won't use it during the holiday season. If those customers are using a card with a rewards rate of at least 0.75 percent, they'll collectively earn $9,987,511 worth of rewards.

The state with the most shoppers missing out was Texas. Four of its major cities made the top 10 in a list of U.S. cities missing out on the most credit card rewards: Houston, Dallas, San Antonio and Austin. In total, 12 Texas cities made it into the top 100 of the list according to the number of citizens missing out on rewards.

The typical holiday budget for card users, according to NerdWallet, is just over $600. Shoppers on average use a card with a 1.14 percent rewards rate, but a card with a rewards rate of 1.25 percent creates a significant boost to the amount of rewards.

No credit is bad credit 
According to a Bankrate report, 63 percent of millennials don't have a credit card. As millennials step into the arenas of automobile and home ownership, they are facing the reality of what it means to have a low or nonexistent credit score.

As reported by Bankrate, one customer attempting to borrow $5,000 from a bank without credit history couldn't get any loans. He had $30,000 in his bank account and an annual salary of $60,000. He avoided credit cards in order to stay within a fixed budget, and to secure a loan, he had to go through his auto dealer.

There are benefits to a solid credit score. Beyond eligibility for higher mortgage and auto loans, using a credit card for purchases already within their budget gives millennials access to the millions of dollars in credit card rewards Americans as a whole are missing out on.

Credit card owners will miss out on millions in rewards.

Credit card owners will miss out on millions in rewards.

Millennials need a solid credit score more than any other generation, according to Bill Pratt, personal finance instructor at East Carolina University and vice president of The Money Professors.

Earn rewards 
Understanding the earning rate and redemption rate is important when choosing a credit card. The earn rate is the amount of cash back or points you receive per dollar spent with the card. The industry standard for reward redemption rates is 1 cent per point. 

The best way to use your credit card for ultimate rewards is to make sure all purchases can be paid off quickly. If interest charges get too large, the payment amounts will negate the value of the rewards earned.

For more information about smart ways to manage your finances, contact Landmark Bank.

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