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4 Signs You Should NEVER Get a Rewards Credit Card

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when to avoid reward credit cards

Generous perks and travel incentives have made rewards credit cards all the rage these days. Get in the habit of using your card for most purchases and you can earn anywhere from 1-5% back in the form of cash, gift cards, and travel. And with the right card, you can even get benefits like primary auto coverage, airline or hotel status, or a free FICO score on your monthly statement.

Yep, the reasons to get a rewards card are almost too numerous to name. Sadly, that can be a huge problem for consumers who heed the siren’s call of rewards without figuring out if they are ready.

4 Signs You Should NEVER Get a Rewards Credit Card

That’s right; rewards credit cards can present a problem for your finances if you don’t have the right mindset or your finances are already on shaky ground. If you’ve considered signing up for a card but are wary of the consequences, take a look at these four signs you are better off going without:

You have credit card debt

If you’re carrying credit card debt already, you should steer clear of getting a rewards credit card. Paying interest on your revolving credit card balances is an expensive endeavor on its own; there’s no need to tempt yourself into spending more.

Instead of a rewards card, consider signing up for a balance transfer card. Balance transfer credit cards tend to offer 0% APR for anywhere from 12-21 months, making it possible to consolidate all of your debt on one card and pay it down fast. Later on when you’re out of debt, you can take a second look at the rewards cards calling your name.

You are living paycheck to paycheck

If you’re living so close to your means that you aren’t saving any money each month, it might be wise to skip a rewards credit card for the time being. Living close to the cuff makes it far too easy to use credit as a crutch, and getting behind could mean getting into debt.

Instead of getting a credit card, work on lowering your monthly bills so you have money to save each month. You can always consider getting a rewards card later in life when you’re either earning more or enjoying lower monthly expenses.

You frequently fall behind on your bills

If you frequently make late payments on your bills, getting a rewards credit card could be a huge mistake. The fact that rewards credit cards usually charge higher interest rates means your interest payments can add up quickly. You’ll also be hit with late fees each time you’re late, and maybe be forced to pay an even higher interest rate after your first or second late payment.

Before you get any type of credit card, it’s crucial to get your money straight. For most people, that means creating a monthly spending plan, getting on a budget that leaves room to pay all of your bills on time, and finding a way to save money for a rainy day.

You spend more when you use credit

Using a credit card causes some people to disassociate from the dollars they’re spending, which is why some people claim they always spend more when they use credit. For some people, credit cards are almost too convenient – as in, it’s far too easy to swipe your card and forget about the charges you made until your bill arrives in the mail.

If you found credit made it easy for you to overspend in the past, it’s unlikely a rewards card would benefit you much at all. Instead of using credit, use a cash budget to stay on track.

Final Thoughts

While rewards cards offer a lucrative way to earn cash back or travel rewards, they aren’t right for everyone. And for some people, the thrill of chasing rewards is what leads them down into the rabbit hole of consumer debt.

Before you sign up for a rewards credit card, make sure you’re debt-free and living within your means. To truly benefit from a rewards credit card, you need a money mindset that tells you to avoid debt at all costs.

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