One of the biggest selling points for some of the top credit cards available today are seemingly generous rewards programs. However, a closer look at the pros and cons of these rewards cards reveals that far too often, chasing credit card rewards is not in your best financial interest.
No Free Lunch
First of all, just like retailers that offer products on sale at a discounted price, credit card companies use rewards programs as a marketing tool to lure customers. While the card companies are certainly on the hook for any rewards redemptions they promise, they make up for these expenses in other ways, such as by charging higher interest rates on rewards cards.
In 2015, the APR on cash back cards was about 2.0% higher than on other cards, including nearly 10% higher for gas station cards. Unfortunately, many card holders are unaware that they are paying a higher interest rate for their rewards card.
The Devil’s In The Details
In fact, recent surveys have found…
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