Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:


Cuts to rewards plans unlikely to hurt credit card use

What would happen if credit card holders no longer received rewards? Not much – but it could cut consumer credit card debt, says a new study on the impact of rewards programs on credit and debit card use.

The paper, co-published by the University of Toronto's Rotman School of Management, found that removing rewards would result in only a small number of credit card customers switching to more debit card and cash transactions.

"A lot of customers use credit cards or debit cards to pay because they like it. So if you take away the rewards, it's not going to change their behaviour that much," says Andrew Ching, a Rotman professor who co-wrote the study with Fumiko Hayashi of the Federal Reserve Bank of Kansas City. "Potentially, it could be better for everybody."

The study used data on consumer payment preferences from the American Bankers Association and Dove Consulting. Researchers also found that rewards programs encouraged consumers to use credit cards even when they carried balances – suggesting eliminating rewards could help reduce consumer debt.

The findings are particularly relevant as more governments consider consumer protection legislation and rules prohibiting credit card companies from covering the costs of their reward programs through interchange fees charged to merchants each time a customer uses plastic to pay.

The paper's findings are backed up by what happened in Australia when that country's government ordered credit card companies to reduce their interchange fees in 2003. Australia's big three credit card companies have since dramatically reduced their rewards programs. Market share has been slightly reduced but credit card transactions have increased.

The complete study is available at:

For the latest thinking on business, management and economics from the Rotman School of Management, visit

The Rotman School of Management at the University of Toronto is redesigning business education for the 21st century with a curriculum based on Integrative Thinking. Located in the world's most diverse city, the Rotman School fosters a new way to think that enables the design of creative business solutions. The School is currently raising $200 million to ensure Canada has the world-class business school it deserves. For more information, visit

For more information:
Ken McGuffin
Manager, Media Relations
Rotman School of Management
University of Toronto
Voice 416.946.3818

Ken McGuffin | EurekAlert!
Further information:

More articles from Studies and Analyses:

nachricht Rutgers-led innovation could spur faster, cheaper, nano-based manufacturing
14.02.2018 | Rutgers University

nachricht New study from the University of Halle: How climate change alters plant growth
12.01.2018 | Martin-Luther-Universität Halle-Wittenberg

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Locomotion control with photopigments

Researchers from Göttingen University discover additional function of opsins

Animal photoreceptors capture light with photopigments. Researchers from the University of Göttingen have now discovered that these photopigments fulfill an...

Im Focus: Surveying the Arctic: Tracking down carbon particles

Researchers embark on aerial campaign over Northeast Greenland

On 15 March, the AWI research aeroplane Polar 5 will depart for Greenland. Concentrating on the furthest northeast region of the island, an international team...

Im Focus: Unique Insights into the Antarctic Ice Shelf System

Data collected on ocean-ice interactions in the little-researched regions of the far south

The world’s second-largest ice shelf was the destination for a Polarstern expedition that ended in Punta Arenas, Chile on 14th March 2018. Oceanographers from...

Im Focus: ILA 2018: Laser alternative to hexavalent chromium coating

At the 2018 ILA Berlin Air Show from April 25–29, the Fraunhofer Institute for Laser Technology ILT is showcasing extreme high-speed Laser Material Deposition (EHLA): A video documents how for metal components that are highly loaded, EHLA has already proved itself as an alternative to hard chrome plating, which is now allowed only under special conditions.

When the EU restricted the use of hexavalent chromium compounds to special applications requiring authorization, the move prompted a rethink in the surface...

Im Focus: Radar for navigation support from autonomous flying drones

At the ILA Berlin, hall 4, booth 202, Fraunhofer FHR will present two radar sensors for navigation support of drones. The sensors are valuable components in the implementation of autonomous flying drones: they function as obstacle detectors to prevent collisions. Radar sensors also operate reliably in restricted visibility, e.g. in foggy or dusty conditions. Due to their ability to measure distances with high precision, the radar sensors can also be used as altimeters when other sources of information such as barometers or GPS are not available or cannot operate optimally.

Drones play an increasingly important role in the area of logistics and services. Well-known logistic companies place great hope in these compact, aerial...

All Focus news of the innovation-report >>>



Industry & Economy
Event News

Ultrafast Wireless and Chip Design at the DATE Conference in Dresden

16.03.2018 | Event News

International Tinnitus Conference of the Tinnitus Research Initiative in Regensburg

13.03.2018 | Event News

International Virtual Reality Conference “IEEE VR 2018” comes to Reutlingen, Germany

08.03.2018 | Event News

Latest News

Wandering greenhouse gas

16.03.2018 | Earth Sciences

'Frequency combs' ID chemicals within the mid-infrared spectral region

16.03.2018 | Physics and Astronomy

Biologists unravel another mystery of what makes DNA go 'loopy'

16.03.2018 | Life Sciences

Science & Research
Overview of more VideoLinks >>>