Banks are undoubtedly steering consumers to rewards credit cards due to the popularity of them. Rewards credit cards are great for racking up airline miles, earning cash back, and even staying at hotels for free. But where’s the catch?
There can be a couple of catches, and what I mean by “can be” has to do with your spending habits and your payment habits. Banks are “banking” on the fact that you won’t pay your balances in full each month, so you will end up paying finance charges on them. This can and will offset any rewards you are earning.
Another catch is the annual fee. Annual fees typically range from $35-$125 which at the highest amount, a card that offers 5% cash back, means you need to spend $2,500 for the year just to cover the fee!
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