Do Credit Card Reward Programs Really Benefit You?

Credit Card reward programs are becoming extremely popular these days as people try to save money wherever they can. Under these programs, you get some points for every dollar you spend. Once you have reached a minimum balance of points, you can redeem it in form of cash or some other financial benefit, depending on which reward program you have subscribed to.

Critics of credit card reward programs say that people who sign up for these programs often tend to spend much more than they would have done otherwise. This means that while you do receive a reward for your purchases, you also end up getting higher debts.

Reward programs are not bad if you are disciplined

Credit card companies however refute this claim. They say that merely by paying through a credit card, you do not necessarily increase your debt level if you spend less than what you earn. In such a case, if you have a reward program, you end up getting significant benefits from it. As long as you know what your financial situation is and make purchases according to that, there’s no reason why you would pile up credit card debt.

Lack of reliable studies

Credit card companies also refuse to believe that these claims are coming from reliable studies. Since data can be easily manipulated by collecting or interpreting in a specific manner, it is important to analyze in detail how rigorous these studies are and how they were carried out. A large proportion of the American population has the tendency to spend a lot more than its income. These people do pay a lot of interest on credit card debts, but that may not have anything to do with reward programs.

Choose reward programs carefully

As there is a lot of choice in credit cards, you should carefully study the reward program before signing up for a card. Choose a scheme that gives maximum rewards on the kind of expenses that account for the largest portion of your monthly expenditure. For example, if you travel a lot, you should find a reward program that gives points for expenses on airline ticket booking.

If you plan you expenses carefully and make timely payments, you will never mess up your credit card account. A responsible credit card user, who only charges necessary purchases to the card, will be saving and earning a lot of money in cash back or other rewards, which will be completely tax free.