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Most people in various parts of the world assume that credit cards that carry rewards are better than the standard credit cards. However, this is far from the truth. There are a lot of drawbacks associated with rewards credit cards and it is important to understand them before falling prey and increasing your debts. Let us take a quick look at why these rewards credit cards can be unrewarding.
Most of the credit cards that carry rewards, though are offered to the common person, do not carry the type of rewards that they can use. Most of them offer cash back offers, discounts, gift cards and air miles that a common working person will not use too often. If you don't shop often, eat out frequently or travel by air often, these rewards are as good as non-existent.
If you think that banks are rewarding you for purchases you make using the rewards card, think again! Though it is true that banks do offer the rewards, there are a lot of costs levied on them in order to make up for the reward points. It is not surprising then that the air miles card costs more than a cash back card which is definitely higher than the standard card. Based on the rewards offered on the card, the cost also increases. The annual fees and interest rates on reward cards are definitely on the higher end of price spectrum.
Did you know that you have to spend thousands of dollars to claim rewards that cost a few hundred dollars? Surprising, but true! This is how credit card lenders make money by outwitting the common man. The limits set are so high that a person has to pay through their teeth before being eligible to claim the rewards. To add to their woes, there is also the expiration date. If you do not redeem your rewards within the time limit specified by the bank, the points will revert to zero and you will have to start from the scratch again.
In order to claim that elusive reward you will have to spend a lot of time just to find out that the reward points are not worth it, in comparison to the fees and interest rates being charged.