Daily Dupaco

Friday, October 24, 2014

Potential pitfalls with reward cards

We all like to be rewarded.

Tami Rechtenbach explains the pitfalls of credit card reward programs

But when it comes to credit card rewards programs, are we really getting a good deal?

Before signing up for any rewards program, read the fine print and proceed with caution, says Tami Rechtenbach, vice president of member services at Dupaco Community Credit Union.

While the promise of a reward can be enticing, many reward cards come with potential pitfalls:

  1. Higher fees. Oftentimes, reward cards charge an annual fee, which might erase a
  2. ny savings the rewards program touted. Other fees, including late payment charges, are typically higher, too.
  3. Higher interest rates. Reward cards often charge higher interest rates than traditional credit cards, making it all the more important to pay off that balance every month.
  4. Loopholes. Once you’ve held up your end of the spending bargain, it can sometimes be difficult to use your rewards. The airline industry, hotels and even cruise lines have blackout periods, times when rewards members cannot redeem their points.

"If you are going to use a reward card, pay it off every month and don’t get caught in the cycle of letting that debt rise and not being able to pay it off," Rechtenbach says.

Sometimes, the best rewards come with cards that aren’t labeled as a “reward card.” Dupaco’s VISA credit card, for instance, rewards its cardholders every day with a low-interest, variable rate; no annual fee; grace period before interest is charged; and other perks.

By Emily Kittle

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