For Many Credit-Card Holders, It's All About Cash-Back Now

For many credit card holders, cash is now king.

With personal debt and unemployment still stubbornly high, consumers are going back to basics. Forget airline miles or free one-night stays—it’s all about cash-back.

Cash and credit card
Cash and credit card

“I'd much rather have cash than time-limited access to a restricted set of choices where my points will expire if I don't use them in time,” says Michael James, a 46 year-old electrical engineer and father of two.

While gift and travel rewards were the rage before, the recession has made many consumers like James opt for cash-like options.

James has managed to avoid fees and charges for over two decades. Today, he holds a single MasterCard with a zero annual fee and 0.5 percent cash-back.

“What I really want is simplicity,” he says. “Liquidity is a big part of that, and straightforward terms.”

Credit-card companies have responded to the change in consumer demands by offering new cards and updated features, while shedding travel points and gadget rewards.

“We've seen rewards scaled back already,” says Adam Jusko, founder of, a site aggregating credit card information for consumers. “And there's every reason to believe that will continue. I expect we’ll see some creativity in how rewards are offered in the future.”

Discover, for instance, is offering the CardBuilder that lets holders customize card features. In addition to picking rates and terms, consumers have the option of various incentive programs like Cashback Bonus and Pay-on-Time Bonus—both money-oriented rewards.

The Discover More card is also gaining popularity, giving five percent back on specified items and one percent on everything else.

While many deals are extended through issuing banks, the two biggest credit card companies, MasterCard and Visa also have branded cash-back cards such as Chase Freedom and the Capital One No Hassle Cash.

American Express has tacked on cash-like features to its charge cards, treating points as currency that can go toward everyday bills like groceries, gas and utilities. These may not put cash directly into the hands of users, but effectively lower monthly out-of-pocket expenses for basic necessities.

“This was wildly popular with our cardmembers,” says Desiree Fish, a spokesperson for American Express. “We had our soft launch a few months ago and with no real marketing, millions and millions of points have already been redeemed.”

This isn’t to say miles and other travel rewards are dead. It's a “test and learn period for issuers right now,” says Fish. Membership rewards are still a key part of American Express's products, just with more choice and flexibility now.

Yet, the growing number of cash programs has a price tag. Giving cash is harder on the issuers' pockets than offering gifts and points. And with the new credit card regulations that limit rate hikes and fees, issuers are taking a serious hit to their profits, which have to be made up somehow, according to Jusko of

The result will be more annual fees, lower limits, stingier perks, more penalty charges—adjustments that all cardholders will have to suffer.

But whatever the changes, users simply want the gift of cash.

“My past is littered with forgotten and expired gift cards, ‘free’ flights using air miles where I'm charged $300 for a confusing set of fees and taxes, and other types of points that expired before I had enough to do anything useful,” James said. “Now I just want my credit cards simple and free.”