Does Your Rewards Card Entice You To Spend More?

I admit it, I have a rewards card.  It’s a Citicard that pays 1% cash back on purchases up to $300 a year.

Does it entice me to spend more? Well, $300 is nice to get in the mail, but doesn’t make much difference on influencing what I buy.

I do find this topic fascinating though, as I often hear people rationalize buying something in order to ‘get the miles’.

So this article in today’s Wall Street Journal confirmed what I had suspected and observed anectodally: People carry higher balances with a reward card than they might with a non-rewards card.

These cards definitely play to the steps we take when tempted to buy something.

Do we need it? Can we afford it? The decision is tilted away from what’s best for us when we remember that we get the miles for it.

I’m not saying that it’s bad to use these cards, but it definitely is instructive to understanding how we are influenced by these programs and to be aware of how our purchasing decisions are thus affected.