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Are credit card rewards really worth the debt you'll accrue?

Tens of millions of Americans have at least one credit card. Using credit cards for purchases of all kinds is so common that it is estimated that Americans as a whole owe hundreds of billions of dollars in credit card debt. For some, credit cards are considered an absolute necessity - they wouldn't be able to make ends meet without them. However, for others credit cards are used for the all-important "rewards" they offer. Bonus points, cash back and travel incentives are all very common rewards that credit card companies use to entice consumers to make purchases. But, are those rewards really worth the debt that will be accrued with credit card use?

In reality, the answer is a plain and simple "no." In many cases, it simply doesn't make sense to use a credit card - accruing debt and interest - just to get a certain type of reward. Take, for instance, a reward that might be used to upgrade an airline ticket from coach to first-class. How much would that type of upgrade cost on its own? Perhaps a few hundred dollars. But, if a consumer uses a credit card to build up to such a reward, the consequences could include much more in accrued interest if the consumer doesn't pay the full balance of the credit card every month.

The fact is, there really aren't any rewards that are worth it to go into a crushing level of debt. However, some people may realize this too late. They have cashed-out on their rewards, but they are still looking at thousands of dollars remaining on the credit card balance. For those individuals, it may become necessary to look into the possibility of filing for bankruptcy to achieve debt relief.

Source: Nasdaq.com, "A One-Sided Love Affair With Your Rewards Credit Card," Nov. 18, 2016

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