Rewards Cost Credit Card Issuers $22.6 Billion Rewards Cost Credit Card Issuers $22.6 Billion

Rewards Cost Credit Card Issuers $22.6 Billion

Bonus Points

AwardWallet receives compensation from advertising partners for links on the blog. Terms Apply to the offers listed on this page. The opinions expressed here are our own and have not been reviewed, provided, or approved by any bank advertiser. Here's our complete list of Advertisers.

Finding out how much credit card companies are spending on rewards can bring a smile to the face of anyone who actively collects and uses points and miles to get more value out of their dollar. A recent report by research company Instinet, a subsidiary of Japanese global investment bank Nomura, stated that in 2016 credit card companies are expected to pay out up to $22.6 billion on reward expenses for their cardmembers.

Ultimately, this is the other side to all those great welcome bonuses you can earn on cards like The Platinum Card® from American Express and the Chase Sapphire Preferred® Card, coupled with the one-off increased bonuses such as the increased bonus for the AA co-branded card from Citi we reported on recently. For the credit card companies, all these offers add up as they try to get customers’ attention and business. The growth in reward expenses has been incredible in the last six years, with reward expenses in 2010 costing card companies $10.4 billion. The increase represents a compounded growth of 14% per year.

Big Spenders

The biggest spender on rewards for their clients during the last six years has unsurprisingly been American Express, increasing its spending during that period by 36%. However, in an ever-competitive credit card market, it means that card issuers have increased their reward spending enormously during the same period. Regarding value, Instinet estimates that currently, Amex clients are receiving half the reward rate that Visa and MasterCard cardholders are getting by card issuers in the Premium cardholder market. In the long term, Instinet concludes that American Express “will find it increasingly difficult to maintain low-value rewards.”

The biggest increase in spending came from JP Morgan Chase; from 2015 to 2016, with all the bonuses and other perks it has been offering, the company’s expenditure is expected to increase by 32% this year—which amounts to an increased spend of $1.6 billion. Concerning pure percentage increase, the biggest spender is Citi—the bank has doubled its spending from 2015 to 2016 with spending expected to rise 50% from $1.3 billion to $2.6 billion. Perhaps this large increase is why Citi have started to scale back some of the excellent benefits offered to cardholders; such as complimentary access to the Admirals’ Club. Although interestingly, the 4th-night free benefit is remaining on offer on the Citi Prestige card.


This is great news for anyone who uses points and miles! It is clear that by nearly doubling their expenditure in the last six years, credit card companies are as keen as ever for your business. Hopefully, the trend continues as competition intensifies, and card companies keep upping their game and offering better rewards for customers to take advantage of.

4.6 / 5 - (10 votes)
AwardWallet Tip of The Day
Did you know that if someone else accesses your AwardWallet account, you will see an alert at the bottom of the page? Clicking that alert will show you all the current sessions accessing your account. If you see something that doesn’t make sense, you can log the other sessions out and change your AwardWallet password. We highly recommend enabling two-factor authentication on your account for increased security.
Show me how

The comments on this page are not provided, reviewed, or otherwise approved by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Leave a Reply

Your email address will not be published. Required fields are marked *


  • Seems like a win/win. I am sure that they are making their fair share of profits to justify this as well!

  • @ryan, there are some opportunities right now to maximize SPG points due to Small BIz promo (through 12/31/16) for double the points, and the Marriott merger of 3/1 SPG transfers.

    I’m sure we will see the cost of this promo in the Amex quarterly financial reports, as the CSR has done to Chase.

  • very interesting- how much increased profits are the credit card companies receiving from new business?

  • SPG is trying to steal UR’s thunder…not sure if that will work.

  • Hoping this continues as airlines increasingly go revenue-driven for awards making it tough for non-business travelers to accrue benefits.

  • The cost of customer acquisition is substantial. It’s a long term plan. They lure us in, then hope the card benefits and force of habit induce us to keep the cards and pay the fees year after year. If you run up a balance, all the better for the banks at 25% interest or more.

    Competition spurs the marketplace and benefits us. The economy has rebounded, the banks are ready, willing and able to seek out the customers in a growing economy. Wallets are open and ready. It seems like Amex has rolled out a few new promos in the wake of the CSR application frenzy. The new 0.5 point on purchases over $5000 on the Biz Plat, and the excellent “pay with points” option may keep the frequent traveler hooked on the top tier Amex cards. But one still must master, and remember, the various options for saving a buck.

    Award Wallet members aside…How many $450 cards can any customer keep?

  • Are CC merchant fees still completely covering award costs? Or is some of the expense coming out of interest and late fee profit?

    • I don’t think any of us can answer that confidently. I think over time the merchant fees fund ongoing rewards, but the upfront customer acquisition cost associated with the bonus and marketing probably comes out of other sources of revenue. 100,000+ bonus points doesn’t come cheap.

  • Spending 22 billion when you are earning goodness knows how many hundreds of billions in the long term is worth it to these companies, that’s why they will keep paying out.

  • Although millions of people take advantage of rewards credit cards, I suspect the general public would be amazed to the extent the Credit Card companies are investing in rewards to attract new clients. Since someone has to pay for these rewards, I wonder how those non-participants at banks feel about footing the bill? I often hear people say “Why are credit card interest rates so high.” I think this provides most of the answer.

  • Its surprising that Amex spends so much money but chase cards are so much better

  • I like to see all the people getting something for all the money we are borrowing and paying to credit card companies. I know I will continue to enjoy my benefits and earned points! I hope they will come up with a way to keep everything worth it all in the coming years, without losing benefits and pluses.

  • We’ll see what happens. Really hope AMEX steps up the game a lot they seem to be lacking that edge they always had

  • I fear for the day when issuers have to cut the ever-expanding rewards program perks on cards like the CSR. Competition will push rewards higher and higher until they are at an unsustainable level. What happens then? Who knows.

    As for myself, I’m enjoying the ride (on the free international flights I get courtesy of AmEx, Chase and Citi).

  • wow. never felt so loved!. That’s $60/per person in the USA, or about $100/adult. Amazing!

  • This is really great news. Specially for someone who uses rewards point for higher priced tickets. For example, one might use 2x the points to redeem business class awards as opposed to economy. But the business class ticket might be worth 4x as much as economy if one actually paid for it.