Credit card rewards and what you should be careful of


ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. 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. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Travel with Credit Cards » Credit card rewards and what you should be careful of

Credit card rewards and what you should be careful of

Updated: October 9, 2017

The content is accurate at the time of publication and is subject to change.
Credit card rewards could be very tempting and cardholders often lose sight of their credit history and budget, when they make purchases just to avail their credit card rewards. However, not all credit card rewards are beneficial. Moreover credit card rewards come with a lot of disclaimers that one needs to be aware of. There are many different terms and conditions that reduce the effectiveness of credit card rewards and sometimes end up making the cardholder overspend instead of saving anything. These are some of the things to keep in mind when dealing with credit card rewards. Be cognizant of the cap when garnering loyalty points Cardholders often swipe their card more than they need to do, in order to get loyalty points. These loyalty points can be redeemed in the form of discounts at retail stores and shopping malls. However, the fine print usually limits the number of loyalty points that cardholders can redeem in a month and also in a calendar year. The rest of the loyalty points usually get expired and hence are in vain. Cardholders therefore need to make sure that the points they are collecting can actually be put to use. Besides, not all of them can be redeemed for direct discounts. Some points can only be redeemed on specific purchases at certain merchant stores which may or may not be of use to you. Don’t shop for the reward Shopping for the reward always ends up making you overspend. The best reward on a credit card is that which will help you save on what you have to spend anyway. Rewards which make you spend more are seldom of any use as they are marketing strategies that will make you exceed your budget. Hence, never spend just to reach the milestone expense stipulated for qualifying for a discount. The same holds true in case of redeeming loyalty points which make you purchase something that you don’t really need. Be aware of annual fees and other charges Although credit card rewards offer you discounts, travel benefits and cash back, you must ensure that your annual fees is waived off at least for the first year. Without this you will end up paying back most of what you have saved throughout the year. A high annual fee along with other charges like cash advance fee, currency exchange fee and high penalties could negate the benefits of the credit card rewards. Interest rates The biggest trap associated with a credit card is the high interest rate. Although rewards allow you to save some money, you might end up with outstanding dues incurred due to additional expenses. The interest rate being high, you end up paying more interest than what you have saved through rewards. That is also the reason why low interest credit cards are the best cards for those with constantly existing outstanding balances as the interests they pay over and above their bills is quite low. With high interest everything you pay for with the card becomes 15 – 20% more expensive.

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:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Other Travel with Credit Cards Research:

Related Research:

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Posted: November 8, 2018

Thanksgiving is coming, and whether you are hosting a meal or coming as a guest, your spendings are going to accumulate faster than you can notice. A holiday feast is a costly matter – each year Americans spend around $50 on a Thanksgiving ... Continue reading
The Best Credit Card for Earning Cash: Discover it® Cash Back

The Best Credit Card for Earning Cash: Discover it® Cash Back

Posted: November 2, 2018

You’ll have hundreds of dollars in your pocket in no time because you’ll earn money back on every purchase you make with this card. There are no restrictions on the amount of cash back you can get, and Discover even matches every penny you ... Continue reading
Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Posted: October 10, 2018

Nights are drawing out, the wind is colder every day and you already feel the lightest breath of winter on your face - autumn is here. Holidays are over, kids are back to school and all you are left with are hefty holiday bills that you ... Continue reading
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!