Mistakes that can be made because of credit card rewards

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Credit Card Applications » Research » Guides » Travel with Credit Cards » Mistakes that can be made because of credit card rewards

Mistakes that can be made because of credit card rewards


Updated: December 26, 2012

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Credit card rewards can be very enticing to the customer and can make him or her purchase items which would not have otherwise been bought. This is the main reason that credit card companies give out these rewards in the first place. The other reason that they give out rewards is because they want the customer to use their card the maximum number of times. But there are a number of things that one has to keep in mind so as not to go overboard. The number one mistake that most people make is accumulating credit cards. It is a very dangerous thing to do. All the various schemes will entice you into opening several credit card accounts as you will be encouraged to use the reward schemes that are offered by all of them. And then you might be tempted to use these cards that are lying around and when you do this, you will end up not having the cash to pay back on your purchases. And having many cards will also give you a lot of headache in tracking your various purchases and making payments on time. The second common mistake is that people start spending in order to earn points rather than the other way around. When people do this, they end up buying stuff which they might not have otherwise bought. Eventually you might end up accumulating a lot of points due to all your purchases but you will also end up being burdened with huge debts that you will have to pay off due to those purchases. The third mistake is failing to understand when to redeem points that are earned on purchases. If you do not redeem your points within a certain time period, you will end up forfeiting those points. Hence it is important to keep track of the expiry date for the points that you have earned till date and redeem them when the time comes. You also need to keep in mind that neither too little points nor too many will be beneficial for you. It is necessary to plan ahead and make purchases only when required and try to redeem points for essential items or cash in order to maximize the advantage that you gain from your card. The last mistake that is most often committed due to credit card rewards would be juggling of cards. When one opens a large number of credit accounts, one would be tempted to use all the cards simultaneously. This is okay if you are keeping the outstanding balance below ten percent of the credit limit on each of the cards. In this case it will be easy to pay it back. Otherwise it will become a big pain to clear all the balances at the same time. Managing your various accounts will end up becoming a full time job and hence it is always advisable to keep the number of credit card accounts to a minimum and make maximum purchases with one primary card.

All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products’ Terms & Conditions on the issuing banks' websites.
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