Yesterday, I read a great post called Credit Cards Don’t Suck…You Suck at Free From Broke. In it, he makes the point that most of the downsides of credit cards can be avoided if you don’t misuse them.
I’m not entirely anti-credit card either, if you’re able to use them responsibly and find a way to benefit from doing so (e.g. reward points, credit history). But even when you’re a financially responsible person, there are still some things about credit cards that suck.
One of my friends uses Citi’s “Thank You” card. One of the things he liked about it was the option to get rewards in an Amazon gift card. However, Citi recently dropped the program. Citi can drop any of its programs, change the points-to-money ratio, and pretty much do whatever it wants when it comes to rewards.
Of course, it’s in the company’s best interest to have a lot of different programs and to make people feel like they’re getting the best deal by using the card. As consumers, we can (try to) go elsewhere.
What matters most is that we take all of this into consideration when we use credit cards. Don’t buy things you wouldn’t buy in cash just to get rewards. Those potential rewards could evaporate.
I think that rewards cards are a great idea if you’ve proven yourself to be financially disciplined and choose to make all or most of your purchases with them. Just remember that the rewards are an added perk. And if your sole motivation for getting a rewards card is a particular reward that fits your life or is a great gift option, then think hard and have a backup plan because it may go away.
Also, remember that you don’t have to carry a balance to earn reward points or build your credit score.