Pros and Cons of Rewards Credit Cards

By Eliza Daglish on July 31, 2012

Rewards cards can save you hundreds of dollars each year in cash back rewards, free air travel, or points redeemable for gift cards at your favorite places to shop. There are some downsides to rewards cards, however.

Let’s examine a few scenarios in which a rewards card would be a good idea. First of all, rewards cards are great for people who can and will pay their bill in full each month. Rewards credit cards are also good for people who can use their card enough to be able to make redemptions when they want to. Those who use their credit cards the most will always benefit the most from their rewards card. Finally, if you shop online, you’ll be able to make more of your rewards card by getting extra cash back from online rewards bonuses.

But there are downsides to rewards cards. For example, people who do not pay off their credit cards each month would be best to seek a low-interest card. Typically, rewards cards have higher interest charges than do normal credit cards. Secondly, those who want to receive frequent balance transfer offers or other financing options will get more offers from a non-rewards credit card.

As with any other purchase or decision, you want to match your selection with the card that best fits your typical spending habits. Because there are so many credit cards on the market, people have more choice than ever into which credit card they should use. Rewards cards are great for high credit people who earn and spend more than the average person. Rewards cards would be a second-rate option for people who do not spend much each year, or who intend to carry a credit card balance from month to month.

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