Should You Sign up for A Rewards Credit Card?
January 25, 2018
So you’ve been thinking about signing up for a new credit card that will earn you miles, points or cash back? That is great news. However, there are certain criteria that should go into making any decision to get a new credit card.. While free travel and other perks are great, there are risks involved. Credit card companies wouldn’t offer such amazing deals if they didn’t have something to gain. They are banking on the wrong people signing up for their cards and that could be you. Here are some red flags for those thinking about signing up for a new rewards card. Do not sign up for a new rewards credit card if:
You Have Excessive Debt
Make sure you have your debt paid off before venturing into the world of rewards credit cards. You will never be able to earn enough rewards to make it worth the possibility of taking on more debt. Whether it is old credit card debt, student loans or various other purchases, take care of your old debt before signing up for any credit cards.
You Can’t Pay Off Your Balance at the End of The Month
This is a big deal. Don’t spend money you don’t have. Don’t carry a balance over into the next month. This is exactly what credit card companies want you to do. In fact, they are betting that you won’t pay it off and if you aren’t careful, they will win, not you.
You are Living Paycheck to Paycheck
Do you have an emergency fund set up? Do you have money in savings? If not, do that first. Do you struggle to make ends meet at the end of the month? If that’s the case, a new credit card is not what you need. Take time to analyze your family’s financial situation, come up with a plan to pay off debt and create some margin in your life before venturing into the world of rewards credit cards. Set your family up short term and long term with a solid plan. You will be glad you did.
You are a Shopaholic
Most of us love to shop. We like buying new things. If you already know that having a new credit card is going to be trouble, then don’t sign up for it. You need to be disciplines with your family’s money and if that’s not you and your spouse, don’t sign up for a new card.
Earning travel rewards, points, and cash back is truly rewarding when done wisely. Being disciplined with your spending, keeping track of every dollar, is the key to winning the rewards game. Make sure you and your spouse know the risks before signing up for a new credit card.
Do you have a plan in place for tracking your credit card spending to earn rewards? Let us know in the comments below!
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Kevin Payne is the co-founder and budgeting and family travel enthusiast behind FamilyMoneyAdventure.com.
Kevin is a freelance writer specializing in personal finance and travel. He is a regular contributor to Forbes Advisor, MoneyGeek, CreditCards.com, Credit Karma, Money Under 30, and Student Loan Planner.