The truth about reward credit cards
Reward credit cards as the name says is simply a kind of credit card which amazingly rewards you of using it. Yes they do reward you of their usage in terms of cash-back, general points, air-miles, gift-vouchers etc. However this is not true, basically credit card companies or banks which offer reward credit cards encourage their customers to use a credit card more often in order to get rewards. So when a person uses his/her reward credit card they are incurring more outstanding balance on their reward credit cards. So they end up paying higher interest or being in debt.
A typical example of a reward credit card is for every pound you spend you get a point and for one hundred points you will get a pound. Well this is not worth because standard APR of reward credit card is around 17.9% so on 100 pounds of outstanding balance you are literally paying around 1.5% interest per month, which on 100 pounds will be 1.50 pounds. So basically in order to redeem one pound you are actually paying 50 pence.
Moreover reward credit cards are only acceptable in major shopping centers or high street stores you cannot use them in general stores, thus encouraging customers to use their (reward)credit cards more often and end up being in debt or pay more interest. people buy reward credit cards by simply looking at the advertisements. But for a person who has never left his/her native country applying for a reward credit card which is offering air-miles as rewards of using a credit card is absolutely a foolish idea.
A typical example of a reward credit card is for every pound you spend you get a point and for one hundred points you will get a pound. Well this is not worth because standard APR of reward credit card is around 17.9% so on 100 pounds of outstanding balance you are literally paying around 1.5% interest per month, which on 100 pounds will be 1.50 pounds. So basically in order to redeem one pound you are actually paying 50 pence.
Moreover reward credit cards are only acceptable in major shopping centers or high street stores you cannot use them in general stores, thus encouraging customers to use their (reward)credit cards more often and end up being in debt or pay more interest. people buy reward credit cards by simply looking at the advertisements. But for a person who has never left his/her native country applying for a reward credit card which is offering air-miles as rewards of using a credit card is absolutely a foolish idea.
