Reward credit cards can be a great tool as they allow consumers to earn points on charges that can be turned into perks such as cash back, air travel and merchandise. According to the credit card companies, the more you spend the more you will get back in reward points; however this is not always the case.
A majority of people use credit cards as a tool to make purchases such as airfares, accommodation, concert tickets, and general online or over the phone payments. However for consumers who let the promise of perks drive them to overspend, a rewards credit card can end up costing them significantly.
Credit Card Rewards Traps
Using your credit card to your advantage to attain numerous rewards all comes down to how much you use your credit cards and how often you pay your bills. For example if you are a big spender that racks up thousands of dollars a month on your credit card, you may find reward programs to be worthwhile.
If you are a modest spender and only use your card sparingly then it’s going to cost you more in fees than you will get back in rewards. However if you pay your bill every month and never gain any interest, then reward programs can offer a handy bonus.
If you are always carrying an outstanding balance and pay interest every month, then reward cards are not for you.
- Select a credit card rewards program that matches your spending habits
- Read the fine print to know exactly what your points can be redeemed for
- Make the most of your rewards credit card charges
- Pay for recurring, predictable charges with a reward credit card
- Link the credit card program to an employer’s travel set-up
- Don’t put reward points in danger (e.g. by making late payments)
If you are currently struggling with your credit card repayments, call Australian Lending Centre today on 1300 138 188 to speak with a debt consultant. We specialise in debt solutions such as debt consolidation, debt agreements, debt consolidation loans, refinancing, mortgages and bad credit loans.
We may be able to help you consolidate your debts such as credit cards and personal loans into one, so that you will only need to make one regular repayment as apposed to multiple. We also have a solution available that can freeze your current interest and prevent any further interest and charges. To find out more, call 1300 138 188 today.