| Getting free things from credit cards, Is it worth it?
Value-added credit cards have emerged from credit card companies competing for your business. What is a value-added credit card? It is a credit card that provides you with more value, like earning air mileage or reward points. There is a value-added credit card for just about everything. From air miles to cash back to Disney rewards to donation cards for charities. These cards can be very beneficial and rewarding to some, and costly for others. There are several things to consider when you have a value-added credit card. For instance, what is your average spending per year and how long will it take you to cash out a reward? Is there an annual fee? Do you consistently pay your entire balance off each month when it comes due? Or do you carry a balance from month to month? Do you rewards expire? Will you use what you are collecting? How much do you usually charge per month? How many points does it take to redeem for something? How do you accumulate 1 reward point or 1 air mile? For some air mileage programs, it can take a minimum of 25,000 miles to get a free airline ticket. Some pay out air miles one air mile for every dollar spent and some pay out one air mile for every two dollars you spend. Know how you accumulate air miles or reward points. Also know for what you can earn air miles or reward points on. Some programs you do not accumulate points/miles for cash advances or for balance transfer or convenience credit card checks. Some you do. It is always helpful to skim through the credit card booklet you get when you first receive the card so that you understand all the ins and outs. If you no longer have your copy, your credit card company can provide you with another. Does the card have an annual fee? Some cards can have annual fees of over $100, and some have none. If you only spend $500 a month on a credit card and it takes 25,000 air miles to cash out, it will be over 4 years before you can cash out. Will your miles expire before you will be able to redeem? If you are paying an annual fee of just $50 a year, in this scenario, you will have paid out more than $200 before you even get your free ticket. Things can always change and it is very common for credit cards to switch hands. Meaning credit card companies often sell portfolios to one another. Program rules can change or the value of the rewards can go up, leaving you in the dark. Plus, most programs have in the legal terms and conditions that it can cancelled or terminated at any time with 90 days notice, for example. So nothing is a guarantee. Often times value-added cards carry much higher interest rates than regular credit cards. Do you pay your balance off each month by the specified due date? Or do you revolve? Revolve means you carry a balance from month to month. You are considered a �revolver� if you pay your minimum payment each month or a little more. Credit card companies LOVE revolvers because revolvers pay finance charges on the money borrowed on the credit card each month. If you revolve, you are gaining nothing with reward type credit cards. If you owe a balance to one or more credit cards see the free article, I�m in debt what do I do? Options are?, for strategies on paying off your credit cards and getting out of debt. Even if you pay off your credit cards each month, value-added cards still may not be right for you, especially if you are paying an annual fee. Be sure you understand how to cash out, when points expire, and how you accumulate points and with what purchases. There are plenty of value-added cards that have no annual fees. These can be beneficial to those that consistently pay their balances off each month in full. Also, a number of debit cards are popping up that earn reward points, etc. and many have no cost to you. But are value-added credit cards worth it? They might be if you pay your balance off each month. But one thing to consider, they also entice more spending. More spending equals more free things. If you�re spending more than you would if you were paying cash you might want to rethink carrying one of these cards in your pocket. Having another bill to pay each month, or the possibility of spending more than you can afford makes these cards a double edged sword. Add in the annual fees and the higher interest rates and these cards can seal your financial doom. Be sure you will use whatever it is that you are earning. Many people are accumulating points and do not know what they are for. Find out. Working in a rewards center for a major credit card company I cannot tell you how many people I spoke with who had accumulated hundreds of dollars that they could not cash out. Knowledge is power, and remember, to be always in the driver�s seat. One other thing to consider with rewards card is the earning cap. Many of these types of cards have an annual cap of how many reward points or air miles you can accumulate. Know if you have one and if it will affect you based on your spending. Aside from earning free things from value-added credit cards, you can also earn free things from the internet. There are many �points web sites� online where |