Anatomy of a credit card rewards program

Thorough overview of how credit card rewards programs work, what the structures are, and some comparison information about different approaches.

The heaviest credit card spenders, and this fact is both uncontroversial and flies in the face of what many personal finance columnists believe, are wealthy and sophisticated. They use credit cards primarily as payment instruments. Issuers compete aggressively for their business, which is quite lucrative. This is not because they pay much in interest, because while they have higher headline APRs they only rarely revolve balances. It is because "clipping the ticket" via interchange on a high volume of transactions is an excellent business to be in.

Overall this will leave you a smarter consumer of credit cards.