Study: Cash rewards prompt cardholders to spend more
Credit cards that give cash back prompt consumers to spend more and accrue more debt, according to researchers at the Federal Reserve Bank of Chicago. The initiation of a 1 percent cash rewards program yielded, on average, a $25 reward each month—and an increase in spending of $68 a month and in credit-card debt of $115 a month, economists said in the study, which will be presented at the American Economic Association meetings next week, The Wall Street Journal reported.
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