Credit Card With Benefits

Credit card rewards can be tempting when you are planning your budget.

Many credit cards offer rewards or benefits to attract new customers to open up an account. There are often strict rules regarding how to cash in on these benefits. Although the benefits may be appealing, you need to carefully consider whether the risk of using a credit card is worth it.

Credit Card Benefits and Rewards

There are a variety of different benefits that credit card companies offer to cardholders. Some cards allow you to earn points to use toward the purchase of airline tickets or vacation packages. Other cards offer the ability to earn cash back on your purchases. They may offer more cash back on specific purchases such as buying gas or eating out. The cash back may be used to purchase online gift cards, or directly deposited into your account.

Using Rewards

Each credit card will have a different method of cashing in your rewards. For airline points or vacation packages there may be rules about when you can travel or how much the credit card company will apply to each package. You may have to reach a minimum number of points before you can apply them toward your vacation. For cash-back benefits you may need to earn a certain amount before you can cash in the points. You may also be required to cash in the points in specific denomination amounts, such $50 or $20.

Warning Signs

These benefits may be worth using your credit card for the majority of your purchases. The points can add up quickly, but the credit card companies do not offer these benefits without being able to profit from them. You should be able to find these benefits without needing to pay an annual fee to have the credit card. Before choosing a card, search online to see if there are complaints about cardholders being able to cash out their benefits because of strict guidelines. Choose a company that does not have these complaints.

Are Rewards Worth It?

The benefits of receiving extra money or perks just for using a specific credit card can be appealing, but credit card companies need to make a profit. If you carry a monthly balance, you are likely paying more in interest than you are earning in benefits. You need to be disciplined in paying off your balance in full each month. If you are having a difficult time following your budget, you may be better off to stop using credit cards all together.

References

• CNNMoney; Credit Card Rewards Are a Real Rip Off; Jessica Dickler; June 2008
• MSN Money; Your five minute guide to credit cards; June 2009