Reward points were built to buy business class seats to Bali and long weekends in London hotels. USAA Federal Savings Bank reported this week that 36 percent of consumers holding credit card rewards are now cashing them in immediately to offset everyday expenses — groceries, gas and bills — rather than saving them for travel or big-ticket purchases.

“Consumers are changing the way they think about credit card rewards,” said Michael Moran, President of USAA Bank, announcing a new suite of rewards cards from Visa and American Express built around the shift. Moran said that what was once viewed as a benefit for travel or larger purchases has increasingly become a tool to manage everyday costs, and that as household budgets stay under pressure, people are looking for immediate ways to stretch their dollars.

The survey behind the finding was conducted by 160over90 Research, an online study of 1,143 U.S. adults ages 18–54 fielded March 26–30, 2026, with quotas set on age, gender and region.

The behavior underneath the number

The details are more telling than the headline figure.

Nearly half — 47 percent — reported using “Pay With Points” for essential items, compared with just 26 percent who used it for discretionary purposes. 42 percent said they redeem points monthly to lower statement balances. 30 percent cash out as soon as they hit the minimum redemption threshold.

Younger cardholders are the most aggressive. Among respondents aged 18–24, 72 percent redeem points monthly or as quickly as possible. Among those 25–34, 51 percent redeem monthly.

USAA Bank’s own transaction data mirrors it. Reward redemption volumes among its cardholders rose 47 percent year-over-year in 2025, driven by Shop With Rewards, which lets members knock down a gas, grocery or retail expense using points. That analysis drew on aggregated, anonymized data from more than four million USAA Bank credit card holders, as of December 31, 2025.

Points, in other words, have stopped being a savings account and started being a checking account.

What’s driving it

The pressure is coming from the grocery aisle. Research from the Urban Institute, released this week, found that roughly 63 percent of working-age adults have used a credit card to buy food. Of those, 19.6 percent did not pay the full balance but made minimum payments, and 8.7 percent could not make even the minimum — up from 7.1 percent in 2023.

“This means that over 1 in 4 working-age adults used credit cards to purchase food for their families and experienced repayment challenges,” the report stated.

Kassandra Martinchek, a co-author of the study, said there are millions “struggling to make that minimum payment when they’re putting groceries on their credit card.”

The Urban Institute found grocery prices have risen 32 percent over five years. Middle-income families — those earning between 200 and 400 percent of the federal poverty level — were hit hardest, with missed minimum credit card payments on food climbing from 9.3 percent in 2023 to 12.3 percent in 2025. Roughly 8.9 percent of adults used buy now, pay later plans to secure food, and more than a third of those users — 34.8 percent — missed an installment payment. About 20 percent said they were dipping into savings to buy groceries.

Who actually pays for the points

There is a second business story buried in the redemption data. A Harvard study estimates that consumers paying with cash and debit are subsidizing roughly $30 billion a year in points and rewards for credit card users.

Premium cards — the ones with the richest rewards — accounted for 60 percent of credit card volume in 2022, up from just 15 percent in 2006, according to the same study. The average swipe fee on a premium card runs 2.1 percent, against 1.7 percent for a basic credit card and under 1 percent for debit.

Merchants feel it directly. Managers at Tiger Fuel, which operates 10 gas stations and convenience stores in Virginia, expect to pay more in credit card fees this year than they will in rent.

The Electronic Payments Coalition counters that the number of lower- and middle-income consumers holding rewards cards has been rising, and that millions of low- and moderate-income families rely on cash back and rewards to offset the cost of groceries and gas. The group argues lower swipe fees would not necessarily reach shoppers, pointing to prices after the 2011 debit fee cap.

The timing

The USAA data landed the same week the inflation numbers finally broke the other way. The Bureau of Labor Statistics reported Wednesday that producer prices fell 0.3 percent in June, a day after consumer prices fell 0.4 percent and annual inflation cooled to 3.5 percent.

But that relief came from a ceasefire and cheaper oil, not from the grocery store. Food prices don’t unwind. The household that redeemed 5,000 points for a tank of gas in June will do it again in July.

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