What Is the Advantage of Signing up for a Rewards Credit Card?

The advantage of signing up for a rewards credit card is the ability to get either points or money back for normal spending habits, according to Bankrate. There are many different rewards programs available, so consumers can choose a program tailored to their lifestyles.

Rewards programs usually use a points system, notes Bankrate. In many of them, each dollar spent converts to one point. That point may be worth a penny in a cash back program, or it may convert to an airline mile or other unit of measurement. When enough points accumulate, the credit card user can convert them into a monetary payout, airline tickets, hotel stays or other rewards. Some programs can only be redeemed with certain companies or at certain times.

Credit card rewards programs can have their downsides, according to Two Cents. When they are used responsibly and the card is paid off every month, they are essentially free money. However, people who carry a balance on their cards may be spending more in interest and fees than they make. Rewards programs can also encourage reckless spending in some people who are trying to get maximum benefits. Some rewards credit cards have an annual fee or other downsides, so consumers need to make sure they are getting enough rewards to make up for the extra fees, notes Bankrate.