The content is accurate at the time of publication and is subject to change.

Credit card rewards are not always as good as they seem. This is one reason why one should be careful about credit cards and reward offers and not get carried away. In fact there are quite a few disadvantages of credit card rewards. If one gives a thought to it, credit card companies are in the business to make a profit. Hence rewards are in a way encouraging one to use credit cards and if one goes out of the way in their expenditures, they might well be in trouble.

There are many problems with a rewards credit card. The first issue is that the introductory APR is 0% on the rewards credit card. This is for an initial term period which is varying. So, one has to be careful with the conditions. If you do a balance transfer to avail the 0% APR, but is not sure of the initial term period the credit card customer might end up having the outstanding balance even after the initial term period which means they are subject to even bigger interest rate now. Similarly most of the rewards have their own limits and if one takes a credit card only for the rewards, and then they might be in a spot of bother.

Many reward credit cards try to attract customers by giving cash back offers. The first problem with that is that the cash back is not constant. On certain purchases, the cash back is 1%, while it varies up to 5% for other purchases. This means that one cannot be sure what will be the discount that they get. The other problem is that the cash back too has an upper cap and very seldom do credit cards have an unlimited cash back offer. Lastly, cash back often encourages customers to buy much more than what they really intend to. This means that they might end up having an outstanding balance at the end of the months and the accumulating interest could become much more than the actual discount the customers get through cash back.

Rewards credit cards have various other problems too. On one side, the customers are drawn towards spending more for smaller discounts that they can do without. On the other side, they end up buying at stores and merchants which are not their first preferences. Many credit cards have discounts only at select merchants and most of the discounts are valid only after you buy goods worth a fixed amount. Sometimes the number of compromises you do for a tiny discount is way too much and the risk you are taking by having a high bill is not worth it. Lastly, even the reward points that you get on many purchases have a fixed date before which you will have to redeem. Else, these rewards points could expire and then they are no good. Also the reward points in some cases could be redeemed only for certain goods. Hence one must be careful in making credit card choice and go for the right brand rather than the offers.