Are Credit Card Points True Rewards or They’re Just Costing You?
Most people chase credit card points as they are rewards, but are they really worth the chased? It might just be causing you to spend more money on unnecessary things. Every credit card company offers promotions such as stacking or accumulating points on every purchase. Normally, you get free stuff when you accumulate certain points. Some of this stuff may be items such as products or gifts, or travel tickets, and many more. However, going after these rewards is not always practical in most cases, as it can lead you to spend more than what you really need. Hence, instead of getting the rewards, you end up spending significant cost over unnecessary expenses.
Points To Ponder
There are certain things that you need to ponder which might tell you whether you’re credit card is rewarding or just costing you more money. The following points will help you better assess your current perception towards chasing credit card points.
Spending More to get Rewards
An evident way that implies the fact that chasing after credit card points is costing instead of rewarding you, is through the significant amount that you need to spend to earn points. Even, some of the credit unions or banks set a certain amount that you need to spend months before you can utilize your rewards.
For instance, if you are previously expected to allocate $2,000 for the first quarter, you may be expected to spend $3,000 to be eligible in getting the same rewards points. This isn’t a concern if you really have to spend such huge amount for your needs. However, when you start spending beyond what is in your budget just to chase after the rewards, this now becomes a big issue.
Interest Rates Have a Neutralizing Impact on Points
Regardless whether you prefer to spend more to accumulate points or rewards, if you consider the high interest rates at stakes, you might realized that it’s not worth it. In fact, the interest charges are approximately between 10% to 24%, which is deemed high even with the least estimate. If you have accumulated balance on your credit card, you will acquire interest charges that neutralizes your points or rewards value. In this case, it is perceived that your points are just costing you unnecessary money.
It Can Cause to Impulse Buying
According to experts, you should shun from impulse buying by all means. Impulse buying just to sought after rewards can lead to a proposition where you treat it as a sort of a game. This will eventually result in spending more just for the sake of getting the rewards that you desire. Moreover, credit card companies tirelessly market points as their rewards and perks, but most consumers are unaware that the real score is more complex than they can imagine.
Moreover, for those who have disciplined and control over their spending, points and rewards are deemed to be beneficial. In contrast, if you don’t have better management towards how you use your credit cards, it might just cause you on the verge of indebtedness in the long run.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.