Pros and Cons of Reward Credit Cards

There are so many types of reward credit cards that many people are tempted to try them out. Before doing so, however, you may want to consider the pros and cons because just as there are excellent reasons to get excited about rewards cards, there are also good reasons to be wary. Reading this article will help you get an overview so you can better reflect on whether a rewards card is right for you.

Pros of Rewards Credit Cards

Rebate credit cards, also known as cash back cards. Here are a list of the pros:

If you’re going to use a credit card anyway, you may as well get something in return.
With the cost of fuel, gas and airline mile rewards can make vacations possible.
Cards that have an explicit focus that you share may reward more in that area and lead to very great savings.
People report getting as much as $1000 on cash back cards, and covering a large amount of their vacation costs on rewards cards.
If the rewards don’t suit you, you can always choose a rebate or cash back card.
If you’ve exhausted all other methods of saving on monthly staples, this may give you a new, added savings beyond coupons, purchasing store brands, warehouse shopping, and making use of outlets and liquidation centers.
If you substitute your credit card for paying cash for groceries, it may streamline your record-keeping.
Cash back cards require little attention other than remembering to use them.
Rewards cards are known to offer low APR’s on bank transfers, and if you are able to pay off the balance within the grace period, you may find this a useful approach to paying down a card balance on another card. (Before planning this, be sure that balance transfers qualify for a grace period.)

So, What Are the Cons?

Points and miles can expire, leaving you with no benefit. In order to use your points and miles, you will have to do some record-keeping to stay on top of the situation.
Rewards can be changed at the company’s discretion, interfering with your plans.
Airlines may have few seats available or blackout periods.
There may be caps on the points, miles, or cash you can earn per year, limiting your rewards.
Any type of fee—whether annual fee, interest on a carried balance or cash withdrawal, or late payment penalty—can offset your earnings.
Route changes may mean that the airline whose travel you have earned no longer goes to the destination you need, and the miles may not be transferable to another company.
Affiliate shops where you can trade your points for merchandise may be more expensive than other merchants.
Shopping at certain locations, such as warehouses—where many people go to save money on supermarket items and more—is not rewarded by some cards, meaning that you might be tugged in two directions.
The merchant with whom the rewards are redeemed may have additional terms and conditions that you will not become aware of until you are ready to redeem your rewards.
You may have to switch away from established relationships with certain merchants in order to earn rewards.
Reward cards tend to have a higher APR than cards that do not feature rewards.
The card issuer is allowed to alter the terms and conditions of the contract at any point. Items that can be altered include:
interest rate
fees
rebate percentage(s)
accepted merchants for purchases and/or redemption
grace period length
the fact that there is a rewards program (i.e., the card issuer can discontinue it)
A minimum amount may have to be earned before you can receive any award.
Balance transfers, ATM use, and cash advances are not eligible for reward consideration, and the second two are not provided with an interest-free grace period.

If you want more precise information about how a rewards credit card might be able to work for you, you may wish to read the article “How to Find the Best Reward Credit Card.”