Can Credit Card Rewards Be Bad?

Personal finance

When I was in college and was new to the world of credit cards, I became obsessed with credit card rewards.  I would try and put everything on my credit card so I could get cash back.  It’s like free money, I thought.  I would even put my rent on my credit card, as at the time the apartment complex I rented from allowed online credit card payments and didn’t charge extra money for the service.  At 1% cash back, that meant I got $10.00 back each month.  Awesome, I thought, another $120.00 in my pocket each year. 

Credit Rating

The major problem was that I didn’t understand the implications of credit scores.  As a college student, my credit limit was only $2,000.00.  That meant that every time I would pay my rent on my card, it would be a payment equal to 50% of my credit limit.  At the time, I didn’t know that using up a large percentage of the available credit can hurt your credit score.  I figured that if you made every payment each month (and I always paid in full at the time), that my credit rating could only be helped.

Psychology of Spending

Another concept I didn’t know much about was the psychology of spending.  I didn’t realize that the average person (and I’m nothing if not average) spends more money when they use a credit card versus cash.  This makes sense as swiping a plastic card is not as tangible as parting with your well earned greenbacks.

But—-But You Get Cash Back or Other Rewards….

To this day, I’m not opposed to credit cards.  My mother, who abhors the use of credit cards except for emergencies would be appalled to know that I usually put my groceries on my credit card.  My card offers 5% back on groceries and to me it’s like getting a free bag of salad every time I go to the store.

Other people swear by building up airline miles from a rewards card.

But I do realize now that it’s important to know what you’re getting into when you let the allure of the rewards points interfere with the cold realities of credit card usage.


What are some of the other pros and cons with using credit cards for rewards points?  Who offers the best rewards out of the major credit card companies? You should do proper research before going ahead with credit card applications.

Was I a total idiot in college for not realizing that using up 25%, 50% and sometimes even 90% of my credit cards might negatively impact my credit rating?


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One Feedback on "Can Credit Card Rewards Be Bad?"

However, there are steps that you can take to lessen the blows of a bad rwport
and help you build it back up. Individuals
shluld visit Annual – Credit – Report to receive a free
credit report and make arrangements too monitor their report often.
Remember that the behaviors acquired in childhood
are those that stgay with us forever.