Credit Card Scams – Avoid These 5 Credit Card Rewards Program Scams

One of the most effective strategies utilized by credit card companies to compete with each other to win your business is through the rewards programs. These programs range from cash back rewards to miles towards airline travel, to discounts on items, services and entertainment. Unsuspecting consumers often perceive that all credit card rewards programs are high value propositions and rarely read the fine print associated with these programs. Often times, the slick marketing strategies that push the credit card reward programs make it appear they are valuable. However, in many cases, they are nothing more than schemes designed with one objective, to obtain a completed credit card application.

So who should hard working Americans trust? True credit card rewards programs are out there, but it is up to you, as the consumer, to sift through the offers, understand the details and do the math. Here are some pointers to help you in that process.

Our experts want to encourage you to make every effort to avoid these 5 credit card rewards program scams .

Many rewards program have little or no real value to positively impact your household budget. First, look carefully at what reward is being promised and decide, no matter how good a deal it may seem, if it is truly something that you want or more importantly, something you need. Conventional wisdom says there is no point in accumulating travel miles or discounts on hotels and rental cars if you have no desire to travel or a fear of flying. Similarly, if the rewards are specific products or services that are not useful to you, you aren't really being rewarded. On the other hand, look for those programs that offer free gas cards in their credit card rewards programs.

The rewards program value is a negative value proposition for consumers . A credit card rewards program tells you rewards only apply to the first $ 4,000 in credit card charges is not very attractive if you accumulate $ 8,000 in charges on a monthly basis. In essence, your value to the credit card company ends at 50% of your monthly charges. Your card shouldn't stop rewarding you if you keep spending.

Limited purchase qualify for rewards points redemptions . Another subtle way credit card companies position themselves to receive the most benefit from rewards programs is by specifying which purchases qualify to earn points towards the rewards. Some credit cards have limited limited options for redeeming rewards, like requiring you to use rewards on certain dates. Too many restrictions on your rewards will make it nearly impossible to use all of the points you've earned. You may find that these limitations are work well within your spending habits. However, if that's not the case, don't settle for a rewards program that is nor right for you. For example, some companies only give points for purchases of items such as groceries and gas. If you choose to use a credit card for your monthly budgeted expenses, it is important to keep track of these charges so that you know where you stand as the month progresses; credit card charges are less immediate and less visible than check or debit card transactions. Not only do you need to keep track of the charges to monitor whether or not you are staying within your budget, but you also need to be sure to pay off the full balance on the credit card each month. If you don't, you will be hit with high interest rates that can quickly compound the debt and reward the credit card company, not you.

Many credit card reward programs are nothing more than traps for you to accumulate more bad debt. A rewards card can easily lead you to a bottomless pit of bad debt when you have to charge things you ordinarily wouldn't just to accumulate rewards. For example, some rewards credit cards only let you rack up points when you use the card toward ordinary purchases like groceries or gas. Since you can possibly spend hundreds each month on these items, it's crucial that you watch your spending and payment habits to keep from going into debt. The primary benefit of a rewards card is to earn compensation from a well managed budget, not to end up looking at debt relief programs.

Finally, consider the cost of the credit card and never accept an annual fee charge. Many credit cards offer enticing money-back rewards, but the fine print reveals that there is an annual fee that could be as high as $ 100 for the card. Before agreeing to any credit card contract, do the math to determine if the programs has a positive or negative value proposition and matches your spending habits on a monthly and annual basis. In other words, you had better receive more value that the offset of the annual charges or it's probably not a good value for you and your family.

Source by Michael Ottman

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