Not particularly, though it may factor in. Rewards are primarily a kickback from the company's ~3% cut.

Yea +1 to that. Transaction fees are where card issuers profit the most, the rewards are just a share of their take.

Which is why Amex can offer such great rewards, because they charge vendors through the nose.

Have you ever read the Terms Of Service when you agree to a rewards program?

Of course it's a simple rebate as well, but I didn't think I needed to point out something that obvious.

As others pointed out with the % splitting, I'm not sure that I agree.

A credit card company could collect spending information and resell it for all cardholders, not just those holding cards having good rewards.

Perhaps this is naive and instead more valuable customers (based on spending more money annually or having a higher credit score to qualify for the card in the first place) have their information sold more, but privacy and reward programs seem like orthogonal aspects of the business to me.

Never thought of that - please expound...

This is for supermarkets, but the same general principles apply:

http://www.theguardian.com/money/2013/jun/08/supermarkets-ge...

>If you have a loyalty card or shop online, the supermarkets will build up a demographic profile of you, and collect data about how loyal you are, what you buy and how much you spend, says Guy Montague-Jones of The Grocer.

This is how retail in America works now: collect data, adjust to fit.