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24 Oct 2018

Four Things to Consider Before You Chase Credit Card Rewards

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by Shannon Marie

According to, nearly a third (29.2 percent) of Americans make credit card purchases simply to earn rewards. But, are the perks worth it? A quick Google search or visit to YNAB’s Facebook fan page indicates that, like with all things personal finance, it depends …

If you’ve been eyeballing cards with cash back, points or miles and you’re tempted to try your hand at “credit card shenanigans” (Jesse’s term, not mine), then consider the following:

Do You Pay Off Your Card Each Month?

If you can easily pay off your card each month, then credit card rewards might be a nice bonus. Of course, you’ll want to carefully manage your spending so that you only charge things that you have dollars to pay off (YNAB is designed to help you do just that).

But, if you leave a balance at the end of the month (the dreaded credit card float), you will end up paying interest on your purchases. The interest will diminish, and likely negate, any perks you receive for using the card, which defeats the whole purpose!

Do Your Spending Needs Line-Up with the Card Requirements?

Take a close look at the requirements stipulated by the card you choose. Many of them require that you charge a minimum amount (which can be in the thousands) within a designated number of months in order to earn rewards. If, for example, you wouldn’t normally spend $3,000 on purchases within three months—but you need to do so in order to qualify for your credit card’s $500 travel perk—is it really worth it? If you’d normally only spend $1,500 in three months’ time, then it’s an obvious pass.

As Jennifer McDermott, Consumer Advocate at, said “The points system … has really tapped into a unique psychology of spending; one that makes us feel like we’re winning when, really, we’re just spending more.”

Are the Perks as Good as They Seem?

Another thing to look out for is your ability to use the rewards offered by your card. For example, airline miles and hotel loyalty points can be difficult to use unless you’ve got flexible travel dates or book months in advance. Other cards make it too easy to cash in your points for low cash value or merchandise that you wouldn’t otherwise buy. Read the fine print and make sure that the reward is, in fact, rewarding.

How Much Will This Really Cost?

Finally, be wary of the cost of rewards cards—they come with benefits and perks to entice you for good reason! If you don’t cancel the card after earning the initial welcome bonus, you could end up paying an annual fee. And, even if you intend to pay off your full balance each month, slipping into debt is all too easy so be wary of your card’s interest rate.

Do Your Research!

Before you play the credit card rewards game, do your research. Make sure it’s worth it. And, if you’re even slightly worried about losing control of your plastic, your best bet is to stick with real money.

If you need help with your consumer debt, then check out our free, online classesMastering Credit Cards with Your Budget, Credit Card Overspending or Create a Debt Paydown Plan. Our friendly teachers would be happy to answer your questions.

Related Articles

How to Do Credit Cards in YNAB

April 13, 2018 | by Jesse Mecham

Beware of the Debt Magnet

April 30, 2018 | by Shannon Marie

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Remember, budgeting is not restrictive. You won’t be spending less, you’ll be spending right. You can do this! Today. Right now. What do you have to lose? Except all that debt and stress. (Ok, so kind of a lot.)


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