Credit card companies know exactly what you truly love and that is the reward. You will do everything to increase your points just to get an ample amount of rewards. No matter how much effort you exert and how long it takes. Usually, the more money you spend using the credit card, the higher points you will get.
Therefore, if you are not thoroughly aware, here are the top three dangers of credit card rewards.
This is similar to any brands at the grocery store providing additional freebies when you buy two boxes of milk for only $10 then you will get another 50ml of juice. When in fact the two boxes of milk are worth $12, these brands will make you think that you have saved at least $2.
When it comes to credit card cashback, they promise to give you 1% cash back when you spent at least $2,000 and you will get $20 Do you really need to spend $2,000 just to get the $20 cashback? You could save that amount to important matters like paying your electric bill, water bill, tuition fees of your kids.
- Annual Fee
Most of the time credit card companies offer free annual fee on your first year, but on your second year being a cardholder, you have to pay for the fee, regardless if you are a monthly user or not.
The annual fee of every credit card ranges from $25 up to $1,200 depends from the company you have applied. You can lose all your reward points if you fail to settle the annual fee on time.
- Interest Rate VS Credit Score
Sudden financial needs for the kids’ tuition fee or one of your relatives asked for financial assistance for the hospital bills are two of the most reasons why you are not able to settle your accounts on time. Even if you are a good payer but missing out just a single payment, your credit score will be at risk as well as the interest rate can get as high as 10%. What’s worst? Your reward points may decrease; depend on the credit card company policies.