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Americans love their credit cards - and the rewards that come with them. From cash back to airline miles, some people go all in, juggling multiple cards and tracking points just to score perks they might never splurge on otherwise, such as flying business class.

In 2024, 81% of U.S. adults had a credit card, which translates to approximately 215 million people. (1)

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Almost half of cardholders carry a balance and, as of the second quarter of 2025, Americans were carrying a near-record total of $1.21 trillion in credit card debt. (2)

But with economic uncertainty and new laws on the horizon, the credit card rewards game is about to change - and not in a good way.

Consumers can't get enough of credit card rewards

Credit card rewards have played a big role in the industry's growth. They've helped card companies win new customers - and keep them spending, often leading to more debt along the way.

“The reward point functions as an alternative currency with real economic value, yet it continues to carry aspirational and emotional significance,” So Yeon Chun, an associate professor of technology and operations management at INSEAD, told Business Insider. (3)

“In other words,” he said,“rewards have become a dual-purpose behavioral currency: A tool for economic relief and a channel for emotional and symbolic value.”

Redeeming rewards“can have an outsize effect on satisfaction” on cash-strapped consumers, according to Bain & Company. (4)

A few years ago, rewards redemption was a“routine episode, or interaction that fulfills a need, unlikely to faze customers,” according to the global management consulting firm.“But it has since become a 'moment of truth' - an episode with a high likelihood to delight or annoy, depending on how well the credit card provider executes the end-to-end process.”

At the same time, rewards have economic value that consumers are using to make day-to-day purchases and cover necessities.

“Most consumers, including middle-income earners, now use rewards not just to manage spending, inflation or debt, but also to preserve lifestyle,” Chun told Business Insider.

Consumers had amassed reward balances of more than $33 billion by the end of 2022, according to the Consumer Financial Protection Bureau (CFPB). (5)

And those rewards are“incredibly popular,” according to the Ipsos Consumer Tracker, summing up the results of a recent poll. (6) Seventy-one percent of Americans have a rewards or cashback credit card, and about one in five younger Americans (ages 18-34) use the rewards for experiences they“couldn't afford otherwise.”

But it also found that over a third of respondents said they wouldn't spend as much on their credit cards if rewards weren't offered.

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Dark clouds on the rewards horizon

Despite their popularity, economic headwinds may cause a reduction or restructuring of rewards programs similar to what happened during the Great Recession, when 0% balance transfer programs were cut back dramatically.

While economic prognosticators disagree as to how likely we are to enter a recession in the near term, continued near-record levels of economic policy uncertainty are having much the same effect on business decisions as a recession.

For instance, airline reward programs have already started to lose value - and other perks may soon follow.

“In the more typical downturn, we are likely to see a different kind of shift. Issuers will preserve the appearance of program stability while quietly reducing average value,” Chun told Business Insider.“Redemption thresholds may rise, expiration timelines may tighten, bonus categories may rotate more frequently, and access to high-value redemptions will become more conditional.”

Even more concerning to consumers who've racked up rewards, those programs may disappear altogether in the U.S. - despite their popularity.

Senator Dick Durbin, a Democrat from Illinois, and Sen. Roger Marshall, a Republican from Kansas, are driving efforts to move the Credit Card Competition Act through Congress. (7)

The bill would reduce interchange fees, which are the fees charged to merchants that allow them to accept credit cards. These fees are a source of revenue for credit card companies and help to fund rewards programs. Some major airlines have already warned that if the legislation passes, frequent flyer programs could disappear.

At the same time, credit card providers can devalue your rewards at any time (which can also happen naturally with inflation) - so accumulating and hoarding points may not be in your best interest.

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Article sources

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

Federal Reserve (1 ); Federal Reserve Bank of New York (2 ); Business Insider (3 ); Bain & Company (4 ); Consumer Financial Protection Bureau (5 ); Ipsos Consumer Tracker (6 ); Congress (7 )

This article originally appeared on Moneywise under the title: You're not imagining things - your credit card rewards are shrinking. Here's what's behind the alarming slide

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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