Credit Cards: Are “Reward Points” Really Worth It?

Why Rewards Credit Cards Aren't All They're Cracked Up to Be
Why Rewards Credit Cards Aren't All They're Cracked Up to Be

( – Rewards credit cards seem like such a great option. You get to have a line of credit to spend as needed and earn rewards each time you use the cards. While this may sound like a great deal to many, rewards cards aren’t actually all they’re cracked up to be.

Not all incentives are as great as they sound.


Many people overspend in an effort to earn rewards. They start putting more and more charges on their credit card so they can earn the rewards being offered, like cash back for purchases or airline miles. This can lead to a ton of debt and high interest fees. Instead of overspending, use your cards to make purchases you need to make anyhow. Just remember to put that money aside to pay down the balance every month.

Minimal Reward Earnings

While some credit cards do offer valuable incentives, most give minimal reward earnings for a high amount of spending. You have to spend hundreds of dollars before you ever see a reward from it. The rewards do not usually equal the amount of interest and fees you have to pay to keep the card valid. You can maximize rewards and reduce fees by making your payments early, and for more than the just the minimum amount.

Foreign Transaction Fees

Most rewards cards come in the form of travel cards. You earn airline miles, free stays in hotels, and similar rewards for using the credit card for other purchases. The company who issued the card may offer high reward points, but you may pay high fees to use it, especially in another country.

Most people travel to faraway places when using their reward miles. What they fail to realize when they’re away is that foreign transaction fees apply. Sure you just got there for free, but now any money you spend on your card while there will be charged a significant percentage, costing you more money in the long-run.

Annual Fees

Perhaps your rewards card works well for you throughout the year. You use it when you need to and gain back rewards on occasion. The problem comes on the year-mark from when you opened the account. You get charged a large annual fee for getting to use the card. Most average $171, potentially costing you more than you earned in rewards… plus interest.

Before getting that rewards card, be sure to look at all the fine print. Just because the prizes seem ideal does not mean the card is a good one. Choose a rewards credit card that offers large incentives without too many fees and regulations.

There are good options out there. You just have to find them.

~Here’s to Your Financial Health!

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