There are many different reward cards and most pay between 1% to 5% back. These cards could still be costing you money though. This is because people generally spend more when paying with credit cards than paying with cash. The most often quoted percentages I see are from 12-18% but I couldn’t find the actual study these figures are based on. It does make sense to me though that people in general probably spend more when using credit cards and the percentage is probably higher than what they would receive back from a reward card.
That being said just because it is true for people in general doesn’t mean it is true for you. When using your reward card you just need to be sure that you aren’t spending more than you would otherwise. I occasionally spend money with my credit card that I know I wouldn’t have spent otherwise because I didn’t have any cash with me. This doesn’t mean I’m spending more money overall though because otherwise I probably would have just made the purchase later and if I didn’t have a credit card I would be carrying more cash with me to spend. I keep my spending quite low overall and don’t feel that using credit cards increases my spending. If I make an excessive purchase using my credit card it will probably be offset by reduced spending somewhere else. I’m confident that my reward cards actually reward me. If you’re using reward cards you should make sure the same is true for you.
With very few exceptions, I buy everything with a credit card. I find I spend less when I use a credit card than when I’m paying with cash. Plus with CCs I always have a paper trail of where my money has gone. Because I spend between $1,000 – $2,000 each month, I’m care very much what card I’m using and how good the reward program is. I put all of my food purchases on a Kroger 1-2-3 rewards card that gives me cash back and customized coupons. I put all of my gas and Costco purchases on a rewards Amex card. And I’ve just received a new cash rewards card that pays on every single purchase and has no annual rewards cap. Between getting an extra 30 days to pay for my purchases and my cash rewards, I have no doubt that my reward cards are rewarding me.
I think the rewards cards I’ve used have had a small impact on my spending. Probably not enough cost me much, but certainly enough to negate the cash back.
I’ve been experimenting with sticking solely to my atm card. I get 0.5% cash back on all of my credit purchases through the card, so it’s almost as good of a deal as a rewards card.