With credit card rewards, cardholders get various enticements just for making using the credit card and making purchases.  These rewards could be frequent flyer miles, gasoline credits, merchandise or cash.  So, on paper, it may appear that credit card rewards are better than traditional credit cards and credit card services.  Yet, there are issues associated with rewards credit cards, issues that may keep many consumers from acquiring one. 

First, credit cards rewards are often more expensive than traditional credit cards.  This is because the cost of these rewards is a financial cost for the credit card companies.  To cover their expenses, they simply charge more from their customers.  These costs can be seen through higher credit card APRs and annual fees.  The annual fees should be of particular interest to creditors, particularly if they are interested in cash-back credit cards.  This is because many times the annual fee associated with a rewards credit card is often more than the credit card cash back value a person receives throughout the entire time they are using their credit card. 

So, what can a person do to minimize their annual fee if they still want a rewards card?  The best solution involves paying the annual fee upfront.  That way they don’t have to worry about recurring monthly charges involving the fee.  However, it should be noted that the annual fee for rewards credit cards could have a fairly broad range from $20 to over $100.  These are amounts that may not be worth the trouble for individuals who do not use credit that often. 

Another problem associated with rewards credit cards is the fact that the conditions in which rewards are granted could change at any moment’s notice.  Credit card companies have every right to decrease the rewards that are available or to completely end the rewards program, if they find they cannot cover the costs associated with providing the awards.  For this reason creditors must make sure they read all of the fine print associated with their rewards credit cards.  This is the only way to really tell if a credit card company plans on changing or even ending their rewards program.  Credit card services will change, even after investigating the terms the credit card company can alter their offers.

Finally, many credit card rewards offer a limit on the amount of rewards points that can be obtained.  For rewards credit cards in this category, no extra points will be rewarded if the limit has been reached.  It doesn’t matter how many times the credit card is used.  To make things even worse, the points that are acquired may also have a timeframe for which they must be redeemed.  If they aren’t redeemed within this timeframe, they simply vanish. 

Rewards credit cards are not necessarily a panacea.  In fact, they may not be the best choice at all for individuals with low credit card balances and/or those who aren’t big on using credit often.  For others, they are a nice alternative, but a person should not go overboard thinking they will go so many ‘rewards’ for using their credit card too much.  And even if they do, the greater consequence is having an amount of credit card debt that they cannot afford to pay off.   With rewards cards in it especially important to evaluate how you intend to use the cards and then weigh this factor against the card offers available.  There is an overwhelming basket of reward credit card to choose from.  Don’t assume the rewards and the costs are the same on all of these offers choose carefully.  Choose the best credit card reward program that fits your lifestyle and budget.  Pay attention to the terms of the credit card offer and try to capture the best credit card rate.

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