Credit card companies have been pretty forthcoming in saying that things will get tough in the post-card act era. And current results show that it is turning out to be true. Rewards credit cards aren’t quite as generous as they have been in the past. Cash back rates have slipped from 3% to around 1.25% and the annual fee is back on the horizon. What has to be considered now is, whether there is any point to trying to build up points for rewards?
Deciding if a rewards card is still worthwhile will come down to your spending habits and situation. So, perhaps it is time to ask yourself a few questions.
Do benefits outweigh costs?
This should be easy to work out. Consider the rewards you might earn and compare them with the annual fee. If you are paying $150 in annual fees for the opportunity to have $100 worth of free accommodation, then you are out of pocket.
If you are trying to work out potential benefits between two cards it can be tricky. One card might have a high interest rate plus annual fee in return for great rewards, but another card can have a low interest rate, no annual fee but no rewards. You need to ask yourself where you save most money.
Do I need to curb my spending habits?
You should be basing your spending on your needs, and budget, not getting tempted by enticing promotions, unless it’s for something you really need. Select rewards credit cards that suit your spending habits and lifestyle. If you are saving up for that once in a lifetime holiday, select a rewards card that promotes all inclusive holiday packages.
What savings can I make?
There are other alternatives to saving money than through rewards points. If you look round you will see all sorts of promotions for coupons, discounts, and being a bit more cautious when spending isn’t a bad idea.
How many points can I earn?
Do some math here. Look at last year’s credit card statements and work out your average spend. Then multiply that by the rate at which you would earn rewards. You could be surprised at how minuscule the amount of points you get is, compared to what you are paying for the benefits of having the rewards card in question. Maybe it’s time to do away with the rewards credit cards and go for a simple low interest, low fee card. You might find you don’t miss those points you never earned but now have more money in your pocket to spend.
