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The Good & Bad of Reward Credit Cards

24 November 2009 3 Comments

I have an American Express that I use religiously.  I put almost every dollar on it that I spend each month.  Also, I’m fortunate to be able to put significant business expenses on it.  The result is that I accumulate some pretty significant rewards points.

The Rewards points are great.  I use them primarily for travel where I will get airfare, hotel and even rental cars for free.  Even this past weekend, I decided to take a weekend at a new W Hotel with the wife on the beach.  I even upgraded our room due to the points I’ve accumulated.  It’s a great luxury.

The problem with Rewards cards and credit cards in general is that you spend more money than you would if you were using cash.  Using a credit card often doesn’t feel like real money and people have a tendency to spend more with them.  If you were on a complete cash system, you tend to guard your money more.

That last part is key… guarding your money.  This is something that we can all improve on.  If it means giving up the rewards credit card in order to spend less, it is worth it.  Fortunately, I can still earn points on business expenses that don’t come out of my money.  For everything else, I think it’s time to go all cash.


  • Daniel said:

    There are times when I come back from grocery shopping and have no idea how much I've spent, but it is definitely more convenient. When I do use cash, I hate carrying around coins in my pocket.

    I think the solution is to put your monthly recurring payments on the rewards card and then use cash when shopping. Sure, you may lose a little on the rewards, but you'll probably save a lot more when you realize how much you're actually paying for certain items.

    How much is convenience worth?

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