What do you use your credit card for? Take your time and think how your credit card affects your life and whether these effects are positive or negative. Maybe at a closer look you will find out that there are more negative aspects than positive.

Here I mean side effects of using a credit card - a feeling that you are able to pay for anything you want. An old credit card holder can tell that this feeling is false and if you want to have at least good credit history you need to get rid of such thoughts.

It is well known that by misusing a credit card you can damage not only your credit score but also your health. Thus it is important to be careful with this delusive freedom and not let it capture your mind. What do I mean?

When it comes to reward credit cards it seems that a person can completely lose common sense in chase of deficient amount of bonus points. For example let us look at Chase Home Improvement Rewards Visa. It offers to earn 3 points on each dollar spent on home improvement. Plus 1 point for all other purchases. In the result, for 2500 points you will get a $25 Gift Card or this may be a Gift Certificate, or a $25 check.

It all looks very nice, but do not forget that after the introductory period your APR can be up to 23.24% (depending on your credit history) and which is more the maximum number of points can be 3000. So, you need to be in a hurry to spend your $830 only in the shops listed in your credit card agreement, preferably during the first six months. Is it worth paying high APR later for only $25 Gift Certificate?

If we take a close look at Capital One No Hassle Points Rewards credit card we will see that it offers to earn five points on each dollar spent with no limit to the number of points. This means that a credit card owner is very motivated to spend his or her money in order to earn points. And again APR can be very high, starting from 16.9%.

And now imagine that you desperately need to earn another 30 points so that you can get a gift certificate or any other incentive from your bank. If you need to do it quickly, no wonder that you go to the closes fast food cafe, or coffee shop, or supermarket. It is convenient and not expensive. And you start to spend money mainly on food. Well, do it, but do not get surprised when you find out that you have gained some extra and unnecessary pounds.

You can end up not only a bit bigger than you used to be, but also with a balance on your card and high interest to pay. You need to be very careful when choosing a reward credit card. Learn not only about rewards that you will get, but also about APRs and fees. Most often you will find that these rewards are not worth applying for.

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Comments

Sarrah, 12:13 AM, October 10, 2007
Having a reward credit card doesn't mean that everything will always be perfect. There are drawbacks that you should take into account.

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