Five Factors That Can Make a Reward Credit Card Unrewarding

Are you planning to sign up for a reward credit card this year? If yes, make sure that you will make the right choice. More importantly, you should follow a strategy to enjoy the benefits and avoid the risks. Consider these five factors that can make a reward credit card unrewarding.

1. High maintenance costs. How much will you need to spend to keep your reward credit card active? Some of the top credit cards carry very steep interest rates and annual fees. The yearly fee can range anywhere from $50 to $100 and above.

If you must pay so much on the yearly fee to keep your credit card active, you should make sure that the reward program is exceptionally great. If you’re paying more than what you’re getting, is the credit card still worth keeping?

2. Rewards that quickly expire. If your credit card imposes an expiration period on the rewards you collected, you could end up losing all those points if you fail to redeem them on time. The ideal credit cards with rewards should allow you to keep your points for as long as your account is active.

3. Spending caps and reward limits. Some of the best credit cards will not award you with points until you reach a specific amount of charges in your account. There might also be a limit on the number of points you can earn per month or per year. Once you reach that limit, you instantly stop earning points even as you continue to spend with your reward credit card. Of course, the best rewards credit card is one that does not impose caps on spending and reward restrictions.

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4. Limited redemption options. Do you have the option to choose from a variety of rewards? Or are you stuck with just one kind of reward? The ideal rewards credit cards should offer flexible redemption options.

For instance, if the primary reward is a free airline passenger seat, can you exchange your points for other rewards just in case you may not be able to go on a trip? Can you exchange miles points for cash, gift check, or as credit to your account?

Also, watch out for reward credit cards that only offer merchandises as rewards. You might be required to give up a large number of points for an item that is not of good quality or can be bought at a much less price in the market. Credit cards that offer the option to exchange your points for cash is still your safest choice.

5. The wrong kind of reward. As mentioned in the beginning of this article, choosing the right reward credit card is crucial. The right card should complement your personal spending habits and lifestyle. What use will rewards be if you can’t enjoy them anyway?

For instance, you might be entitled to earn double points for every dollar spent or a huge bonus on transactions made from affiliate merchants. But if these affiliates are high-end shops that sell items out of your budget’s range, then obviously, you will not be able to benefit much from your reward credit card.


Author: Ann Wilson
