Things To Avoid In A Rewards Credit Card
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Things to Avoid in a Rewards Credit Card
Summary:
The fierce market competition among credit card issuers has led to the creation of various rewards credit cards, each designed to attract more customers. However, navigating through these options can be confusing. Here’s a guide to help you avoid common pitfalls when choosing a rewards credit card.
Key Points to Consider:
When searching for a rewards credit card, it’s crucial to be cautious. Not all issuers have the cardholder's best interests in mind. Some companies use reward programs to mask unfavorable terms while encouraging more spending. Here’s what you should look out for:
1. High Annual Fee:
Avoid credit cards with steep annual fees. Consider this scenario: earning 1% back on a $5,000 purchase gives you a $50 reward. If the card charges a $50 annual fee, your reward is negated. Always calculate potential rewards against the annual fees you’ll pay. Many cards offer no annual fee with similar point systems. Don’t be swayed by attractive promotions; instead, carefully read the terms and conditions for a clear understanding of the incentives.
2. High-Interest Rates:
Be wary of cards with high Annual Percentage Rates (APR), especially those with variable rates. If you don’t pay off your balance monthly, interest charges can outweigh the rewards earned. Variable rates are tied to the Prime Rate, meaning your APR can increase significantly, making your credit card more costly. Also, these rates often have a minimum cap, ensuring your APR won’t drop below a certain level even if the Prime Rate decreases.
3. Blackout Dates and Restrictions:
Some cards impose blackout dates for earning or redeeming points. This restriction could mean losing points you’ve accumulated if they don’t meet the minimum requirement for a reward. Review redemption terms carefully. For example, some cards may forfeit your points if you have an outstanding balance. Misunderstanding these terms could lead to losing rewards without realizing it.
By keeping these considerations in mind, you can navigate the options more effectively and choose a rewards credit card that truly benefits you.
You can find the original non-AI version of this article here: Things To Avoid In A Rewards Credit Card.
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