Are Credit Card Rewards Worth It? The Pros and Cons


Lenders like banks and financial institutions often offer rewards with their credit cards. They are a way to entice customers into choosing their product over competitors.

It may seem appealing, as redemptions can range from earning cashback to dream vacations. However, this system is not for everyone. 

Whether you’re already using credit card rewards or are thinking about starting, you need to know the benefits and risks. Otherwise, you might end up paying unnecessary fees, taking money away from your more important spending categories. 

This article will break down the pros and cons of credit card rewards so you can find out whether they’re worth it for you. First, though, let’s recap what credit card rewards are. 


What Are Credit Card Rewards?

As the name implies, credit card rewards allow a card user to get a reward, usually cashback, points, or miles, for making purchases. The rewards, as well as the spending categories, will vary depending on the specific card. 

The rewards are attractive, and you’ll even find many of them offering at least 2% in cashback with purchases.

However, there is always a catch. 

Often, these credit cards have the highest APR. You’ll be paying more in interest before you even get to the top tier. It also means that you have to pay off your balance each month or risk getting into credit card debt.


If you don’t pay enough, you will only be paying off interest each month.


They’re also only reserved for those who have the best spending habits. A missed or late payment can disqualify you from getting the best rewards. 

If you’re not expecting to pay the card consistently, you shouldn’t think about getting one.

These cards also typically have higher fees than others. Travel reward cards tend to have over $139 in annual fees, according to U.S. News.



There is also a case of qualification. If you have relatively new credit and are building up your score, these credit cards may not be easy to access. 

Most lenders only offer these cards to those with good to excellent credit scores. You’ll need at least 690 for your FICO score.

The good news is that once you do reach that score, the lenders will often offer it to you without even asking. It doesn’t happen all the time, but if you’re aiming for a reward card, it might be best to check what the institution is offering in advance.


Types of Reward Cards

There are three types of reward cards. Some cards offer one, while others have a combination.

Here’s what you can expect from each:



Cashback rewards are a straightforward system. It means that you earn a percentage of money back from each purchase you make using a credit card. 

For example, if you have a 2% cashback, you can earn $2 for every $100 you spend. It may not sound like much, but the savings can add up.

Any discount is a discount, and credit card companies often compete to offer the best cashback rates. They are helpful if you’re the type of person who likes to use their credit card for everything.

Some companies offer higher returns for specific spending categories. For example, you can find cards with bigger cash backs when you use them for groceries.

The rates can vary. You may find one offering 3% for transportation but only 2% for gas stations. 

You’ll have to do some research to see what has the best rates for your lifestyle.



Unlike the previous system, points systems operate differently. Instead of earning a percentage of your purchase, you earn points depending on the amount you spent. 

These points are usually at a fixed rate. For example, you can get one point for each dollar spent.

The rates also differ depending on your purchase. 

For example, you can get more points if you’re using the card for a ridesharing service. These offers may have time limits, so pay attention to what the current offers are.

What you can get with points will differ depending on the card you have. It can provide some credits for shopping, or you can redeem the points directly for items like electronics.



Miles reward cards operate similarly to points. They have a fixed rate, and you can earn more depending on what you use the card for. 

You can use the miles to redeem discounts or flights and hotels. With enough points, you can earn free travel or an all-expenses-paid trip.


The Pros of Credit Card Rewards

To examine whether credit cards with rewards are worth it, we need to look at the advantages. Here are the most common and significant out of all of them:

  • Can fit your lifestyle - With all the credit card options out there, you can find one that fits your lifestyle. You can choose a card that gives the most by spending on a specific category. If you have a family and spend a lot on groceries, for example, getting cashback is a great way to save money. If you love traveling, a miles credit card may offer you the best rewards. You can also choose one that gives higher points on domestic travel or travel with a specific airline, depending on your needs.
  • Saves money - Whether you’re using the rewards for online shopping credit or travel discounts, you save. If you plan on doing these things anyway, having something in exchange will help you make the most out of your money. Some reward cards even go beyond standard rewards and give you extra things. Make sure to read the websites carefully, so you know what you’re getting before you sign up. 
  • Has nearly limitless options - It’s guaranteed that there is a reward credit card that matches the way you spend. With hundreds of cards available, you’ll only need to discover the one that can provide you with the most value for your purchases. It’s good to have something in return for the money you spend.


The Cons of Credit Card Rewards

It’s not all good, as having credit card rewards in your mind can add some negative aspects. Here is what you need to know:

  • Reward rules - To save money, you have to use what you’ve earned with your purchases. It means there will always be a limit, and you won’t be able to get all the rewards offered unless you pay more. Even if you manage to get enough for the item you like, there is no guarantee that it will be available once you redeem. Rewards can rotate, and there is often no set schedule for changes.
  • Expiry - Even the rewards you manage to keep will not stay with you forever. If you redeem a discount but hold on to it for later, it may not be available in the future.  If you don’t like using rewards immediately, it may not be worth it for you if they’re just going to expire. 
  • Reward caps - Depending on the card you have, it may come with a cap on rewards. For example, your 5% reward may only have a limit of $2,000 per quarter. It doesn’t mean that it is a bad card.However, you’ll have to check how you spend to make sure you don’t go overboard. If you have larger spending habits, these limits will mean your card is actually not as helpful as you thought it was.
  • Thresholds - Some credit card rewards won’t be available until you redeem those of a lower tier. For example, you can only get a vacation reward if you claim travel discounts several times. It will depend on the card you get, but make sure to read the requirements. Some people have chosen the wrong cards because they followed large prizes they thought they could redeem.
  • Encourages Spending - Unfortunately, the rewards you earn from credit cards might be a little too motivating. If you’re already a big spender, it could cause you to go over your budget trying to get the next tier reward. Also, maximizing your credit card rewards may mean opening multiple credit cards. If you don’t think you can handle the temptation and want to avoid massive debt, then you might want to avoid the world of credit card rewards. 


Strategizing for Credit Card Rewards

Credit card rewards offer many benefits and, sadly, limitations. To make use of them, you’ll have to consider your options carefully. 

One way you can maximize the points is to manage several cards for different categories. As long as you can justify that you’re spending enough for each, then you can hold two or three cards.

However, the rewards must have more weight than the fees attached to them. If you’re going to spend and save less than its annual fee, the card may not be worth it.


Having many cards also means that you have to learn how to juggle and manage them.


You’ll be paying several times since they’re likely from different issuers.

One way to go about it is to have a single rewards card. You’ll only have to make sure that every part of its offerings is ideal for your lifestyle. 

As long as it provides you with the most value, you can keep that card with you.

However, you must remember that the companies behind these cards may change their policies at will. You’ll have to be willing to change or walk away when the terms are no longer favorable for you. 

After all, these companies are looking to make a profit first and give to their clients second.


Should You Get a Reward Credit Card?

Getting a rewards credit card means weighing all the pros and cons to conclude. If you know these three things, it’s a good sign you should get one:

  1. You have an excellent credit score
  2. You know that you can pay the card monthly
  3. The rewards of the card justify the fees you have to pay

As most cards will have high fees and interest rates, the best option is to have an excellent credit score. You’ll get more access to valuable cards with offers that aren’t available for those with a lower score.

It also means fewer interest rates and lower fees, with higher caps. Of course, you should always practice good credit management, which is what you’ve done to reach an excellent credit score in the first place.

Secondly, you must be in a position where you can spend on the card without going overboard. You have to guarantee that you can pay for the card.

If you can do that, then the card only becomes an added benefit because you get the rewards without worrying about paying it each month. You are replacing cash using the card because it provides better options for you.

The last would be the rewards. You’ll have to do a bit of computing to see if the rewards would justify the fee. 

If it does, then you can move forward with applying for the card without any uncertainty.

Of course, not everyone is able to fulfill these three conditions. You’ll have to work for it if not. 

Once you reach these conditions, though, that’s when you should apply for a rewards credit card.


Weighing It All Together

In most cases, a rewards credit card will be worth it. Applying for one that offers something in return is an advantage over traditional credit cards. 

Even if you do not maximize the rewards, you’ll still get something in return for every purchase you make. 

Without it, you won’t have an opportunity to get credits, bookings, discounts, and more.

If you want rewards credit cards with acceptable fees and returns, consider getting one from 121 Financial Credit Union. We are offering credit cards with low APR and great rewards.

Back to Blog

Related Articles

How Do Secured Credit Cards Work?

How do you get good credit if you have no credit or build better credit if you have poor credit? ...

How to Use a Credit Card to Build Credit: Top 5 Ways to Do It

If you’ve got a credit card, congratulations. Not only does it give you the power to make purchases...

Debit Vs Credit Card: What Are the Differences?

Debit and credit cards are payment vehicles used instead of cash when you purchase items. They’re...