The Rewards Points Strategy: Making Credit Cards Worth It?
17 April 2008
One Comment
I’m not a huge fan of credit cards. Most cards feel like an invitation to rack up debt. But I have friends who swear by their credit cards — the kind which allow you to rack up rewards point by making purchases. And the types of rewards: one friend uses a card that lets her build up frequent flyer miles and score free plane tickets. Another has a card that gets him cash back (he’s started paying all of his bills by credit card).
It’s definitely tempting. I could use a couple of free plane tickets, and who couldn’t use a little extra cash back. I’ll admit that I’ve started looking at my options. I’m not entirely sold on the plan, though. I still have a few concerns (and if you have counter-arguments, I’d love to hear them).
One of my biggest concerns is setting up automatic payments off of a credit card, which seems like one of the best ways to take advantage of rewards points. It seems like adding more steps to paying my bills is just begging for me to trip up somewhere. Some mistakes are easily fixed, but I don’t want to put myself in the position where handling a problem costs more than my rewards points are worth.
I’m also worried about spending for the sake of rewards points. I’ve been out with several people who pick up the tab or purchase some item that they don’t need, justifying it with the statement: “It doesn’t matter — I’m getting points on my card!” I don’t think that earning points should outweigh saving money, but many of these rewards plans are set up to tempt people to do just that. I know that credit card companies want us to use our cards, so that they can make money, but I’m trying to be frugal and build savings — not pick up new toys to accrue rewards points.
Lastly, I’ve been struggling to put an actual value on rewards points. Is the time and effort to build up points actually worth the reward in the end? Could I be spending the time to sign up for a card, call about disputes and play musical chairs with my bill paying system to be earning money, rather than spending it? There are few credit card companies that don’t have at least a few hassles for their customers, after all.
I don’t think my concerns are enough to hold me back if I found the “right” rewards card, but I haven’t found one that tips me over the edge quite yet.
When I was in college, I was very thrifty with my money and I had plenty of time. I paid for everything with my credit card to earn my 1% cash back.
Now that my time is in short supply and actually worth something, rewards just don’t appeal to me anymore. I’d much rather use my debit card and receive 0.5% cash back every month on “credit” purchases.
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