Hazards that come with points-based rewards programs - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » News » Other » Hazards that come with points-based rewards programs

Hazards that come with points-based rewards programs

Hazards that come with points-based rewards programs
The content is accurate at the time of publication and is subject to change.

There are plenty of hazards that come along with the points-based rewards programs, and at least 2/3rds of all credit card holders in Australia have these points-based rewards, and if they are not used wisely it can put the card holders into more debt. These programs typically include frequent flyer points, shopping vouchers, general rewards like appliances, instant or cash-back rewards, which will look like you are getting something out of nothing as the money would have been spent either way.


These rewards are of some value only for those who use their cards often, and not for someone who does not prefer using a credit card as a paying option.


A financial analyst at the research group Canstar Cannex, Mitchell Watson states that the rewards basically will entice a person to spend more using their cards, and discourage the use of their savings account. If the debt is not paid regularly, then one would end up in serious debt. Hence these card users must be really disciplined with their payments.


Rewards cards in general attract higher interest rates compared to the non-rewards cards and this is the key factor in sending card holders into a deeper debt cycle. There is an average of a 5% difference in the interest rates between reward cards and non-rewards cards. This is even without taking the higher annual fee into consideration. If the payments on the card are not made in full every month, then the interest rate levied on the card as well as the annual fee may easily outweigh the benefits or reward offers from the card.


Hence, Canstar Cannex has recommended that it is best to forget these rewards cards and choose a low-cost card instead. If one is intent on choosing a rewards card then it is best to see how much you are likely to use the card in a year and choose a rewards program based on a rough estimate of the card usage. This is a better way to get the best returns from the card. One will also have to choose the best reward offers and decide on that.


One must always ensure that the rewards program matches the spending pattern in some way. These rewards cards must reward you at the places that you shop most frequently. Over and above all of that one must pay all outstanding debts, states Mr. Watson.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
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.
Add to Favorites:

Related News:

New Visa Cards From CRYPTO.com

Posted: July 17, 2018

CRYPTO.com, a payments and cryptocurrency platform, is now offering three new cards - Icy White, Jade Green and Royal Indigo. These are Cryptocurrency-based credit cards. With them, people can get a wide range of perks and benefits, ... Continue reading
A New Priority Pass Restaurant and Lounge in Washington D.C.

Posted: July 16, 2018

Hitting the lounge for some rest and relaxation when flying can be a great perk. And now people with Priority Pass membership - or a credit card giving them Priority Pass lounge access - have two new options to check out when passing ... Continue reading
New LL. Bean Credit Card

Posted: July 13, 2018

L.L. Bean's credit card portfolio was purchased by Citi Retail Services, and they have now partnered with MasterCard to launch a new credit card, offering 4% on purchases made at L.L. Bean. But that is not all; With the L.L. Bean ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
We'll match all the Miles you've earned at the end of your first year. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
0% Intro APR on Balance Transfers and Purchases for 18 months. After that, the variable APR will be 15.74% - 25.74% based on your creditworthiness*
For Excellent, Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!