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Research: Benefits and disadvantages of credit card rewards -

Credit card customers need to educate themselves on which card rewards are worth acquiring and, which shouldn`t. In fact, some of the rewards are only disguised to lure the customers into spending. Therefore, there are two sides to a given situation. Customers should look at credit card rewards as a way of obtaining savings, rather than to make purchases, specifically, in order to get points, every single time. As long as they don`t throw away their money or increase the outstanding balance, it is fine to let go of some rewards like discounts after milestone expenses.

Benefits of credit card rewards

Credit card rewards are special as they add value to purchases made. It is nice to get 1% cash back on your purchases. Most credit card users` bargain for small savings and along with the cash back offers as these ensure that one saves, when they are shopping.

Another benefit of credit card is that, it is a reward for consistency. The more consistent a customer is in terms of spending carefully and then paying back promptly, the better will be his or her credit score and rewards offered. It is, encouraging from a customer`s point of view, to be maintaining a good credit score and use the credit card to make frequent purchases. This also gives you an expenditure report at the end of the month, allowing you to monitor your expenses. Cash expenses are hard to track.

Credit card rewards are also like Christmas gifts, because you keep accumulating points over a year, and then you get the opportunity to cash in and save a few dollars or sometimes even more than that.

Disadvantages of having credit card rewards

If your credit card offers you a 25% discount by spending 200 dollars at a store, then you are already in a dilemma. It might appear to save 50 dollars on your purchase is substantial. However, if you were planning to buy something worth 25 dollars and spent 200 dollars it is not really good. If at the end of the month, the extra hundred or so dollars cause you to miss the bill payment deadline, your outstanding balance increases due to the late fees along with an added interest. These put together would erase the saving you made. Therefore, milestone expenses should be avoided.

Another disadvantage with these rewards is that most of them barring cash back, favor some brands over the other. If you are someone who is used to one brand, you might have to make a compromise with your preferences. Lastly, some customers spend to redeem loyalty points, which is not really advisable.