A card might return one to five percent in rewards on a purchase. Carrying that purchase at a high interest rate can erase the reward quickly.
Calculate net value
Annual fees, interest, redemption restrictions, and unused benefits belong on the cost side of the equation.
Do not spend to trigger a bonus
A welcome offer is not profitable if meeting the threshold requires purchases that would not otherwise happen.
Simple cash back can be enough
The best reward system is one that is easy to redeem and does not change healthy payment behavior.
Sources
- Consumer Financial Protection Bureau, Credit Card Rewards Report.