Freelance Writing Jobs | Today's Articles | sign in

Are Credit Cards With Rewards Worth it?

Getting Into Debt Using Any Charge Card is a Poor Financial Decision

Nov 11, 2009 Christopher Pascale

Credit cards are a necessity for many people, especially those who do not carry cash. For those that enjoy the rewards of cash back and SkyMiles, caution must be taken.

Credit is a way of life for many. Many families today are getting loans on cars lasting five, six, and seven years, and lenders are starting to get hot and heavy with their promotion of 40 and 50-year mortgages. Meanwhile, savings is something near zero in the majority of US households.

While all of this is serious, using credit is not necessarily a bad thing in today's economy. Many people rely on good credit history (a history of following lenders' rules while in debt) when they are in a bind. The ugly side of credit is for those who misuse, or misunderstand, its purpose.

Using Credit Responsibly

The most important thing for one's financial health is to stay out of debt. While this may not always be possible with certain events, such as buying a car after an accident or purchasing a first home, everyday purchases should revolve around regular income and a reasonable budget.

Eating out is fine if the restaurants match one's salary, but going out to five-star restaurants every week on a management trainee's salary can really add up, and the debt will eventually pile up and remain long after those richly delicious meals have gone the way of the porcelain trail.

On the other hand, those who use their cards and then pay them off, incurring no interest, would be wise to obtain rewards for such admirable fiduciary habits.

Getting Rewards Through Credit Card Use

Credit cards offer an array of rewards, such as cash back and SkyMiles. The way it works is that a card holder who has an account offering 3% cash back would receive his or her bonus after charging the account and then paying it off.

So, if an account is charged $1,000 over the course of a month and then paid off, the account holder would receive $30 in return.

The advantage to credit card companies is that they know most people either carry a balance, whether they want to or not, and that some will become so excited over the prospect of their benefits that they'll extend their borrowing beyond their ability to pay it off.

To answer the original question: are credit cards with rewards worth it? the answer is, for some. Those who cannot exercise the financial responsibility to keep their accounts at zero will garner almost no benefit, and maybe higher interest payments. But for those who spend only what they could have in cash, the rewards can be phenomenal by way of free airfare and cash in one's pocket.

The copyright of the article Are Credit Cards With Rewards Worth it? in Personal Budgeting/Finance is owned by Christopher Pascale. Permission to republish Are Credit Cards With Rewards Worth it? in print or online must be granted by the author in writing.

Get Big Rewards for Purchasing on Credit Card	Irresponsible Borrowers Should Avoid Credit Cards	Some Cards Have Better Rewards Than Others
More Money is a Great Reward for Card Usage