Four reasons you should ditch your rewards credit card

Credit card rewards
Remember last year when I was obsessed with finding a rewards credit card that gave me the best rate? I thought I had found my match but after more research, I firmly decided that I would keep my low-interest card instead. To this day I’m shocked by the number of people I know who are slaves to their rewards cards, but who aren’t actually reaping the rewards, instead they are being DRAINED. So here are my four reasons why you may want to ditch your rewards credit card… with some bonus suggestions at the end:)

1. You are in major card debt!
This one is a no-brainer. Rewards cards have some of the highest APRs around, if you’re already in credit card debt these are some of the worst cards to have to pay off! Is that $12 free movie ticket every other month worth the 2-3x interest you’re paying for your rewards? I don’t think so.

2. You carry a balance!
This is less nefarious, but the charges can add up. Maybe you don’t have major credit card debt but you don’t always remember to pay off your card from one month to another (or you use it as short-term access to savings from one paycheque to another), just keep in mind that even a few hundred dollars each month adds up when it comes to finance charges. It may not be very obvious, but finance charges are often folded into your total balance and some people aren’t even aware they are being hit $5, to $10, to $20 bucks a month, each month, simply because they don’t always pay in full.

3. You’re shopping for the sake of racking up rewards
I can’t emphasize this enough. This point is especially important for people with Air Miles or other loyalty cards that work with a variety of stores and have weekly offers. It can be very tempting to play the game and go to these places simply because you think you can rack up some bonus points, but you’ve gotten think it through and make sure that your choice is cost effective. Sure you earn more points at X store than Y store, but what if it’s cheaper at the store with no points? You’ve got to know the value of these ‘points’ in relation to actual dollars.

4. The annual fee
This is a big one that a lot of people forget. Usually when you sign up for a rewards card, they give you some BIG JUICY BONUS to get you sucked in. This could be something like “Bonus points for any purchase over $200 in the first six month” or “10,000 bonus points immediately!” but they are often things like “No annual fee for the first year!” And this is how they get you. Come year two? You could be spending anywhere from $70 to $300 for your card! Yikes! Always beware of that annual fee.

Alternative ideas

Master your non-credit rewards cards
Shoppers Drug Mart is my rewards card of choice. I’ve become very good at waiting for the “Spend $75, get 18,500 points” promotions, and can usually rack up the 95,000 points required for $170 in free products every 8 months or so. If I had more groceries or stuff to buy, I’m sure I’d be even better, but if you play your cards right, it’s an easy rewards opportunity to take advantage of.

Big online shopper? Use Ebates.ca!
Ebates is a cashback dream for people who do a lot of shopping online. Before you do any major purchase, sign up with Ebates and check to see if the online retailer of your choice is on Ebates, then you can make sure to get anywhere from 1-10% cashback by using the site. I’ve only made a few bucks from it so far, but the rate of return is higher than most credit cards rewards rates and it’s GREAT if you do a lot of online shopping. Sometimes they even have deals and rewards coupons specifically for Ebates users.

And the classic way to save on purchases? You can always coupon!
Coupon Queen

Do you use a rewards card? Are you guilty of any of the above, or are you a mean, lean, rewards card machine?

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