Credit card debt has a way of causing problems

The Credit Card Habits Of Rich Americans

Do you have $100,000 just laying around? If you do, then I’ll go out on a limb and say that you are rich.

It’s always interesting to learn what we can about how these big spenders use their credit cards, and what we can learn from them. commissioned a study on how these cardholders earn rewards, and the results were interesting…

The rich like their rewards just like the rest of us

According to their survey, 60 percent of affluent Americans credit cardholders (those with investable assets of $100,000 or more) say that cash back is their favorite form of credit card rewards, while only 22 percent said that they preferred frequent flier-miles.

But if you think it’s just those filthy-rich people who love their cash so much, consider that a recent Fidelity survey found a similar preference for cash back (63 percent) among all American credit cardholders. So in this area, the rich are just like everyone else.

Check out: The 5 best cashback credit cards right now

Breaking it down by gender

What I found really fascinating was how reward-card use differed by gender. Affluent women prefer cash back over miles by nearly four to one (67 percent to 17 percent), yet wealthy men chose cash back by just a little more than two to one (56 to 25 percent). So guys tend to like their miles and the ladies prefer cash back.

Although the survey didn’t delve into the reasons, I’ll speculate. Earning frequent-flier miles is inherently riskier than earning cash back. The airlines are constantly changing their programs to make it harder to redeem miles, and you never know when there will be an award seat available for the lowest mileage level.

Yet when travelers are able to redeem their miles for premium class flights or expensive, last-minute flights, they can realize far more value from their rewards than they would’ve by earning cash back. So perhaps this data is saying that guys are interested in riskier behavior. Or maybe men are just more likely to be the ones planning travel, and thus more interested in frequent-flier miles than women.

Check out: The 5 best airline miles cards right now


Breaking it down by age

The survey also found that two-thirds of wealthy millennials prefer cash back, while just 14 percent would opt for miles. This means rich kids don’t really share the interest in frequent-flier miles that their parents do.

To me, this makes  sense, since older generations were raised during a time when frequent-flier miles were easily redeemed for a “free flight.” The younger generations have likely wised up to, or were never on board in the first place, with the bait-and-switch game that the airlines now play with their “loyalty” programs.

Check out: What’s better? Cash back or airline miles?

So what have we learned?

Although the rich have a lot more rewards than the rest of us, they seem to do things much like we would. They love cash (which could explain how some of them became rich in the first place) and are rightly skeptical of frequent-flier miles.

Yet for the most part, the same decision-making process the rich use to select their reward credit cards can be scaled down to apply to those of us with more modest means. By choosing the rewards that best fit your needs, and avoiding interest by paying your balance in full each month, you can earn the most valuable rewards regardless of whether you’re truly rich, or just want to be.

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