The Reward Points Trap

True or False: Paying for Everything Using Your Credit Card to Get Points is Smart!

False: On the surface its sounds like a great idea.  Pay for everything using your credit card, get rewards points and pay it off every month.  Done, simple…easy!  It’s like getting something for nothing right!  The sad truth is, however, it rarely turns out this way.  You have money in the bank and room still on your credit card, so you decide not to pay it off in full one month because there is something you want to buy, or a vacation you want to go on.  It’s human nature and the credit card companies know this.  Offering points is a great way to encourage people to use their credit card and most people end up carrying a balance as a result.  Rewards points can be a great perk, but they can also lead to increased credit card balances if you do not adhere to very strict spending habits.

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    1. Carrie,

      You want a secured credit card in this situation. Basically you secure your credit line by making a deposit and then it works just like a regular credit card and reports to the major credit bureaus. I believe Discover offers one that has rewards and a direct path up to an unsecured card.

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