More Americans Participate in Credit Card Rewards Programs Than 401ks
No surprise, Americans are putting off saving for retirement in lieu of more living in the moment—a tempting but potentially costly mistake (in more ways than one).
More people are enrolled in credit card rewards than are contributing to 401ks or other retirement savings accounts, according to a recent report by Value Penguin.
Examining data collected by Claritas Financial, Value Penguin discovered 61 percent of U.S. households participate in at least one credit card rewards program, while just 58 percent use any type of retirement savings vehicle.
The report pointed to instant gratification as a potential reason that consumers behave this way.
Other explanations?
For one, there’s the aggressive nature and invasive prevalence of financial institutions’ credit card marketing efforts. Value Penguin pointed to research by EMI Strategic Marketing, noting several top credit card issuers in America spend upwards of a billion dollars per year on advertising.
Plus, retirement accounts require participants to give up part of their income now in order to enjoy the financial benefit of doing so later—sometimes decades down the line. In contrast, many credit cards are free or low-cost. And for those who pay off their balance each month, rewards programs are seemingly offering something for nothing—right now.
The report assessed data from the 100 most populated cities in the country. Other key findings by Value Penguin include:
- Miami had the lowest retirement savings rate. Only 39 percent of households have a retirement savings plan.
- Eight out of the 10 worst-performing cities were from either Florida or California.
- Arlington, Va. had the highest retirement savings participation, with 70 percent of residents contributing.
- Just 10 cities save more in retirement plans than use credit card rewards: Oklahoma City; Tulsa, Okla.; Indianapolis; Plano, Texas; Lincoln, Neb.; Louisville/Jefferson, Ky.; Omaha, Neb.; Fort Wayne, Ind.; Little Rock, Ark.; and Des Moines, Iowa.
Jessica Claeys is an editor, writer, and graphic designer, who has been creating both print and digital marketing and communications content for 10+ years.
Jessa Claeys is a licensed insurance producer in the state of Colorado and an insurance editor for Bankrate. She currently covers auto, home and life insurance with the goal of helping others secure a healthy financial future. Jessa has over a decade of experience writing, editing and leading teams of content creators. Her work has been published by several insurance, personal finance and investment-focused publications, including BiggerPockets, 401(k) Specialist, BP Wealth and more.
