Credit cards offer increased rewards this holiday season

The current economic downturn has caused credit card companies to break with incentives traditionally offered by rewards cards.

Many stores are beginning to offer cash back and free food options rather than airline miles, while some companies are testing loyalty programs for big spenders.

“Coming out of the recession, every retailer is holding a hat in hand with a discount to appeal to consumers conditioned to look for low prices,” David Robertson, publisher of The Nilson Report, told The Dallas Morning News.

Target is offering shoppers who use their REDcard credit or debit cards a 5 percent discount off their checkout total. Chase Bank’s Freedom card offers consumers 5 percent back on up to $1,500 in purchases through the new year, the news source reports.

U.S. Bank and Kroger supermarkets have teamed up with MasterCard, offering free groceries starting this November for customers who use their 1-2-3 Rewards card at the checkout. Every swipe accumulates points that can then be redeemed for gift certificates, The Dallas Morning News reports.

The move is an attempt to get consumers to spend this holiday season, as holiday spending is estimated to drop for the third year in a row, according to recent Gallup research.