Are Credit Card Rewards Actually Free? 36 Comments
Credit cards are a common denominator for many consumers even across borders. These world wide ways to pay have found homes in the wallets of a high percentage of those who qualify to use them. With such a booming product, more and more lenders join the game creating mass amounts of competition in the credit card industry.
To make their credit cards stand above the competition, many lenders carve out their own little niche in the rewards industry. For instance, American Express did a great job with SkyMiles Credit Cards by partnering with Delta Airlines, Discover is pretty well known for cash back rewards and Chase created a Disney credit card that’s still a big hit to this day.
One thing these credit cards all have in common is that they all reward you for using them. Although their points systems will each be a little unique, they all work in a relatively similar way. As you make purchases, you will earn points, the points will add up and when you are ready, you can cash them in for the rewards that the card comes with. Pretty simple huh?
But, there’s one big question that’s raised around all of this, “Are credit card rewards really free?”. And, there are a couple of answers to this question. Here they are…
The Technical Answer – Yes, rewards provided by credit card companies are free. You don’t pay a penny for your rewards, you pay for your debts.
The Realistic Approach – Because you are getting rewards in return for using your credit card, chances are, you will use it more than you did in the past. The resulting debt will cost you money. Not to mention the debt you were already racking up. Therefore, the only way to get free credit card rewards is to use your card properly.
How To Get Your Credit Card Rewards For Free
Choose The Right Credit Card – If you want to get rewards while paying absolutely nothing for a credit card, you’re going to have to choose a good card. Chances are, to qualify for the card, you will need great credit scores. The card that you are looking for offers the rewards you want, no annual fee and a grace period of at least 30 days. If you find a card that matches these 3 criteria, chances are, it’s a good choice.
Use Your Card Within Reason – You are going to have to use your card to earn rewards. But, when you get your credit card, don’t go out making purchases left and right without thinking about the consequences that will follow your purchases. Your worst enemy in this process is a month to month balance. Therefore, it is up to you to keep your purchases within a certain amount that you can afford to pay back each month.
Pay Your Credit Card Off Each Month – The reason you want a card with a 35 day grace period or longer is so that you have a more than reasonable amount of time to pay the bill. If your balance lasts for longer than 35 days you will be charged interest so, make sure that you pay it off every month on a specific day. In doing so, you will avoid interest all together.
Although rewards credit cards are a great way to earn freebies here and there, it’s important to make sure you know what you are doing when using them and that you stop when you take it too far. The bottom line is, rewards credit cards create a game out of spending. A habit that should only take place as a necessity is now a way to earn points. If you have an addictive personality or addictive spending habits, I strongly advise the use of a different type of credit card.