Common Mistakes Made Because of Credit Card Rewards

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Common Mistakes Made Because of Credit Card Rewards

Updated: December 26, 2012

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Credit cards are the need of the hour, be it for individuals or businesses. It is another name for convenience and credit card companies are finding big money by catering to the smallest of your needs. They even have worked out schemes that can prove lucrative to if you prove loyal to the use of their credit cards. One such wonderful scheme is that of credit card rewards.

Rewards work out wonderfully and is a way the credit card companies pay back to us for using their services, but there are certain common mistakes we make while trying to make the best use of it.

Mistake 1: Accumulate Cards

This is a very dangerous thing to do. The different schemes will lure you so much so that you begin to think every card is equally good. You will want to take the advantage of credit card rewards that each of them offer and just start accumulating the credit cards from multiple banks. Gradually you will be tempted to use all of these and will end up in debts from all ends.

Mistake 2: Spend to Earn Points

We develop a habit of spending for the sake of earning points and rewards rather than thinking if our purchases are justified. Eventually, we accumulate points, but in the process, we also accumulate debts that can be far beyond our repaying capacity. Many people who have got overboard with credit card rewards have paved their own way to bankruptcy due to this very habit.

Mistake 3: Fail to Understand When to Redeem

You are made multiple offers to redeem your points, but you should know your spending habits and the maximum points that you can accumulate when you follow that pattern. Neither too less points nor too many points may help you with the best schemes and hence you must be calculative and plan well ahead for best use of the redemption of points.

Mistake 4: Juggling with Credit Cards

Some of us have a knack of juggling with credit cards when we are unable to pay out debts. We try to do a balance transfer to newer credit cards. Remember that this balance transferred will not help you earn points in any way and you have to think of repaying it at the earliest before accumulating further debts and bearing the high interest rates.

At the end of the day, whether you benefit or not from credit card rewards depends entirely on how wise you are with handling them.

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