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Is a Rewards Credit Card Worth Using?

Credit card reward points can be redeemed for cash, shopping and travel – what’s not to love? At face value, all of these rewards seem great. If you spend a lot of money using the same credit card, you can go on vacation. What we don’t always realize is that these rewards come with high risk. Deacon Hayes, author of YOU CAN RETIRE EARLY, shares safeguards that all credit card users should consider.

Many people use a credit card for every purchase in order to earn the rewards that come with using the card. While this can be beneficial, it’s also a plan that comes with high risk. If you are committed to using a credit card for the purpose of gaining rewards, consider putting the following safeguards in place.

1. Track your spending: By tracking the amount of money you spend each month, you have a safeguard in place that will help ensure you’re not going over budgeted amounts even if you are paying them with a credit card.
2. Pay the balance in full each month: When using a credit card for rewards purposes, it’s vital to pay the card balance in full every month—no questions asked. If you don’t, you’ll be paying monthly interest on the card that can reduce or negate any rewards you are earning.
3. Say “no” to impulse purchases: One of the dangers of using a credit card for rewards is that it becomes very convenient to use the card for impulse purchases. In order to avoid running up debt, it’s crucial to have the self-discipline to avoid impulse purchases.
4. Stick to your budget: Committing to sticking with your budget is another important safeguard that will help you avoid.

Here are 5 good credit card habits.

Excerpted from You Can Retire Early by Deacon Hayes. Copyright © 2018 by Deacon Hayes. Used by permission of the publisher. All rights reserved.

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