Consumers cash in on reward cards

NEW YORK, Dec. 31 (UPI) -- Zero-percent balance-transfer offers for credit cards may be on the wane, but U.S. credit card companies are offering cash-back reward cards.

Since 2002, the number of U.S. households using a cash-back card has grown 38 percent to 32.6 million, and cash-back cards are considered the hottest segment of the credit card industry, the New York Times reported Saturday.

Discover, which pioneered cash-back reward cards, said it gave away $500 million in 2005, usually via a 1 percent pay-back in cash.

Discover's Platinum card pays 1 percent for all purchases made on the card, but gives a 5 percent rebate on purchases at Walgreen's, CVS, Rite Aid, LensCrafters and about 10 other merchants.

Credit card companies know that consumers use a reward card as their primary credit card -- 38 percent of reward cardholders said their cash-back card was their primary card, according to TNS, a global market research firm.