{"id":2118,"date":"2019-10-18T10:36:57","date_gmt":"2019-10-18T10:36:57","guid":{"rendered":"https:\/\/www.lasvegasadvisor.com\/travel\/?p=2118"},"modified":"2019-10-18T10:37:06","modified_gmt":"2019-10-18T10:37:06","slug":"when-you-shouldnt-get-a-rewards-credit-card","status":"publish","type":"post","link":"https:\/\/www.lasvegasadvisor.com\/travel\/when-you-shouldnt-get-a-rewards-credit-card\/","title":{"rendered":"When You Shouldn’t Get A Rewards Credit Card"},"content":{"rendered":"\n

As a rule of thumb, credit cards are a good way to get a lot of reward points fast. We see plenty of deals that offer hundreds of dollars, tens of thousands of points or other huge bonuses just for signing up and doing a little spending on the card. Heck, we offer a bunch of them with a spending bonus<\/a>. But those reward points cost the issuers dearly and bonuses have been rising, so somebody has to be paying for them. Don’t want to be that person? Good, we don’t want you to, either, and it’s the reason we put a warning<\/a> on every credit card post. But this article about when you shouldn’t get a rewards credit card is still worth a read.<\/p>\n\n\n\n

When the Fun Stops…
Shouldn’t Get A Rewards Credit Card<\/h3>\n\n\n\n

If you carry a balance on your rewards card, stop reading now and go find a cheaper interest rate. Yesterday, the Wall Street Journal (paywall) did an interesting article about the interest rates that credit card companies charge<\/a>*, and you probably won’t be surprised by what it says: Even as national interest rates decline, banks are increasing<\/em> the rates that they charge credit card consumers. Why? Because they can. By raising the margin that they charges over prevailing rates, banks are <\/p>\n\n\n\n

How much are you paying?<\/strong> The average interest-charging card now charges an interest rate of 17% annual percentage rate, and reward cards are even higher than that. If you have a proprietary retailer card, the rate is going to be about ten percentage points higher than that. The average U.S. household that charges a balance owes $8,600+ on their cards, meaning that they’re paying close to $2,000 per year just in interest.<\/p>\n\n\n\n

\"Pros
Photo by Clay Banks on Unsplash<\/a><\/figcaption><\/figure>\n\n\n\n

Rewards Don’t Offset the Costs<\/h3>\n\n\n\n

Just for fun, I took a look at some of the credit cards that we’ve talked about recently. <\/p>\n\n\n\n

For example, the Southwest Airlines cards<\/a> are offering huge promotions right now. Just for signing up and hitting the minimum spend requirements, they’ll give you enough points for $900 — $1,200 in travel. But if you don’t pay your bill in full each month, they’ll whack you<\/strong> with an interest rate anywhere from 17.74% to 24.74%. <\/p>\n\n\n\n

How about the Chase Sapphire Preferred<\/a>? It’s one of our favorite general rewards cards. It also comes with a sign-up bonus worth about $1,000. But if you don’t pay your balance in full each month, the rate is even higher, ranging from 17.99% to 24.99%. <\/p>\n\n\n\n

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\"Best<\/a>
The Best Card for You – Based on Your Spending <\/strong>
\u201cThe ONLY TOOL to find Best Card for You<\/a> – Based on Your Spending” <\/figcaption><\/figure>\n\n\n\n
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The Best Way to Win the Credit Card Game<\/h3>\n\n\n\n

It’s simple:<\/strong> Don’t carry a balance. If you pay your bill in full each month, you’ll get all of the rewards with none of the costs. <\/p>\n\n\n\n

But if you can’t do that, look for cards with balance transfer offers<\/a>. They’ll offer you a reduced, or even 0%, interest rate for an extended period of time. You may have to pay a fee to transfer your balance to one of these cards, but if you pay 3 or 4% up-front to save 20% for the year, you come out a big winner.<\/p>\n\n\n\n

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*<\/strong>I apologize if this article is behind a paywall, but we all know what it’s going to say: Don’t get a rewards card if you carry a balance each month.<\/p>\n\n\n\n

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Further Reading – Points & Miles<\/h4>\n\n\n\n