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Downfall of Reward Credit Cards

Jul 12, 2008
Every individual wishes to have a credit card and having a cash back credit card just adds value to the credit card that you have. Money spent on a cash back card is money owned to the credit card company. If individuals have cash back cards, they stand a chance to win their money back.

People need to be extra careful, as there disadvantages to having cards. Any type cash back credit card charges interest rate. These rates are Annual Percentage Rates (APR). They differ from the introductory rate.

Some Of The Disadvantages Are:

If you do not pay the balanced amount, it will be added to the next monthly bill statement and will ultimately increase the amount you need to pay to the cash back credit card company. It consists of the original balance, the previous month's balance and the new purchases that you make. In short, pay the minimum balance on time.

When there are repayments, the rate of interest that you need to pay to the credit company increases. The balance has to be paid in full to avoid these issues.

Companies require a minimum payment every month. When the usage of cash back credit card is regular, it is not possible to clear the outstanding balance, as it keeps increasing.

Next, missing payments also do not benefit cash back card holders. For example, it affects your credit card ratings as well. They get a negative rating, which may stop some of the benefits that come with these cash back credit cards.

You may have multiple cards. More cards mean more credit to spend, but it does not mean that you had increased your income. There is a huge danger, when multiple cash back cards are stolen. The thief might change the pin codes for all the cards and he/she may make the codes the same for all.

It is not easy to alter the codes and passwords of all these cards. Hence, the thief will end up using your identity to purchase goods. The interest rate for which has to be paid by the cash back credit card user, i.e., you.

Multiple credit cards have a negative effect on the cash back cardholders rating. In addition, having more than ten cash back credit cards is not advisable. It is wise to cancel unused credit cards.

Multiple credit card holders attract higher interest at different rates. You need to transfer or change it to zero balance accounts to avoid higher rates of interest.

Use the cards frequently to gain reward points. Prompt payments help you gain more rewards.

Cardholders need to keep their information such as passwords and pin codes secure. Cash back credit cardholders are responsible for any kind of security breach.

Cash back credit cards are the trendiest way of shopping. Finally, these cards are a type of financial obligation, and hence you have to use them intelligently and avoid falling prey to their disadvantages. Remember that even though there disadvantages to these cards, the advantages outweigh the disadvantages.
About the Author
Find reward credit cards and more of Tom's work at FINDcashbackcards.com
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