Are Credit Cards with Reward Systems Worth It?

Want to earn free travel miles? There’s a credit card reward system for that. Many credit card companies offer incentives – like travel miles, points, and cashback – for using their cards. The idea of spending money and getting money back is enticing, but is it really worth it?

Credit Cards With Reward System

The Perks of Rewards Cards

Rewards cards can be an effective tool for earning cashback or points. Many cards offer one or more of the following:

  • 1%-2% cashback on all purchases
  • Bonus cash back on certain types of purchases
  • Welcome bonus that gives a huge amount of points if you spend a certain amount in the first few months
  • Travel insurance
  • Fraud protection
  • Purchase protection
  • Different cards have different rewards, and the best rewards credit card programs are only available to people with excellent credit scores

The Drawbacks

A rewards card sounds great on paper. You get free money. You rack up points. You get rewarded for spending money.


But it doesn’t really work like that. Credit card companies aren’t in the business of giving money away. If they were, they wouldn’t be in business for long.


They use rewards systems to entice people to sign up for their cards. You can make these rewards worth it, but that takes careful planning and a lot of effort.

Fees vs. Rewards

Let’s say that you get a credit card that gives 2% cashback on all purchases. Right away, you put your groceries, gas, and other purchases on your card. You just earned 2% cashback on all of those purchases. Feels good, right?


But if you can’t pay off your balance, in full, every month, you’re probably spending more in fees than you’re earning in rewards. Most rewards cards have an annual percentage rate of 16.89% – 24.25%, which is higher than the average credit card.


That slightly higher interest rate means that you’re paying a little more in fees every month. Those extra fees cancel out your rewards, so if you’re carrying a balance over, you’re probably paying more in interest than you get in rewards.


Interest isn’t the only fee to consider. Many rewards cards also charge annual fees, which can be as high as $100 or more.

Maximizing Points is Exhausting

Even if you pay your balance in full every month, maximizing your rewards can be exhausting. You may only earn bonus points for certain types of spending, or there may be a cap on bonus points for each category.


Maximizing points and rewards means having to juggle multiple rewards cards and keeping track of which categories have bonus points for each one.


For most people, it’s just not worth the time investment. If you’re serious about maximizing your rewards, it’s doable. But you’ll have to juggle multiple credit card statements and balances.

Some Rewards Expire

Even if you manage to pay off your balance every month and find a way to maximize your points, you still need a system for redeeming your rewards.


With some rewards systems, points expire after a certain amount of time or if your account is dormant.

Is it Worth It?

Credit cards with reward systems can be worth it, but only if you:

  • Pay off your balance in full
  • Have a way to manage your rewards
  • Make sure that you redeem your rewards
  • Spend responsibly

Weigh the pros and cons of each reward card to see if it’s worth it for you and your financial lifestyle.

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