CNN Money is taking a hard stance against credit card reward programs. Citing a study released yesterday by Consumer Reports, which I have not yet seen online, rewards cards entice customers to spend more than with regular credit cards. Additionally, the restrictions common with many cards make the rewards less valuable than they appear.
The article mentions the fact that reward credit cards often have higher interest rates. Interest rates should not be a consideration. If you carry a balance on your credit card from month to month, it is very unlikely that any rewards program will be beneficial. You’ll pay your rewards right back to the credit card company in the form of interest payments, or worse, in the form of late fees.
My cash back benefits seem to be decreasing despite my continued use. On my American Express Blue Cash for Business card, I’m only earning 0.5% because I haven’t reached a certain threshold of spending. My Citi Dividend World Mastercard is faring better, though I don’t have a good idea if I am earning all the cash back I am supposed to be earning according to the card’s terms.
Are you satisfied with your credit card reward program?
Credit card rewards are a real rip off [CNN Money]
Updated March 28, 2010 and originally published June 3, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.