Credit Card Rewards Equate to Free Money – Right?

PROBLEM #31: I Love New Things, and I Feel Like the Rewards from My New Credit Card are an Added Bonus.

Why are we so obsessed with credit cards? Especially cards that come with extravagant rewards for using them. Have we become so blinded by the allure of so-called free money/points that we neglect the debt that surely follows? This PROBLEM is so widespread that it’s become almost a game. “How much cashback can I get?”

Doing a Google search on: “reward credit cards: how much cash can you get?” yields over 30 million results. It’s no wonder the little guy can’t win, and you can’t “get ahead“. We as a culture are chasing the carrot on a stick of rewards and cashback.

Maybe we should start calling them debt cards instead of credit cards. Click To Tweet

 free money

Does Free Money Actually Exist?

You know there is there is no such thing as free money – right? Only your grandma gives you money with no strings attached. Or maybe that uncle that is always slipping a $20 in your pocket – thinking you don’t notice. Remember the old adage: “If it seems to good to be true, it probably is.”

Yet, when it comes to money, this straightforward thinking is thrown out the window. Especially when a bank or credit card company dangles the carrot of 5% cashback on their newest card. So we sign up for the card, and promptly start to rack up points – errrr – cashback – I mean – charges on our newly minted card.

We justify it by saying – I need to meet the minimum purchase requirements to qualify for these fabulous rewards. We tell ourselves that these were things we intended to buy anyway. Who knows – maybe they were. Were they really . . . ? (imagine stern Mom look here . . .)credit cards in back pocket
But with this card, it’s just so easy. Look at that great deal . . . I’ll just pay if off at the end of the month. And I get 5% cashback. That’s . . . like . . . $5  whole dollars every time I spend $100. Or it’s like a 5% discount on everything I buy!!

Hopefully, you have the income and the money to pay the bill that is coming. Because there is a bill coming. There always is. Remember – No free money.

Paying the ‘Piper’

Eventually you’ll have to ‘pay the piper’. Remember the story of the pied piper. He played beautiful music on his magic pipe. All the children of the town were enthralled with the piper, and followed him around. Eventually he led them to their destruction.pied piper

How was he able to do this? Well, the pipe he played was magic for one thing. But the children just blindly followed him – because of the music, and their parents did nothing to help. I’m sure they thought it was harmless fun. They found out the hard way what it means to ‘pay the piper’.

What about you? Are you chasing rewards and cashback? Have you come to the point in your life where you’ve had your reckoning with the piper? Have your creditors or debt collectors been harassing you? Because if you can’t ‘pay the piper’, financial destruction is in your future.

Related: Read 3 Reasons Why I Gave Up Credit Cards.

The best way to never have to ‘pay the piper’ is to not use a credit card in the first place. Credit card debt is one of the worst kinds of debt. The interest is usually high – anywhere from 12-18%. And paying the minimum payment is not a long-term payment plan. If you do this, all you end up paying is interest and your principal balance will never go down.

To pay off your credit card debt, you first need to STOP using it. You need to adjust your spending behavior. Then it becomes a matter of simple math. You need more coming in (income/paycheck) than going out (bills/expenses). A budget can help with this. If your interest rate is high, you could also consider re-financing.

Related: Read 3 More Reasons Why I Gave Up Credit Cards.


How can we get people to understand the danger of credit cards? Big banks and credit card companies have successfully couched a potentially dangerous product in appealing terms. The marketing is strong with them.

Maybe we should start calling them debt cards instead of credit cards. Because that’s what credit is – available debt. And it’s accessible to anyone who can hear “the music”. But remember – everyone who follows the piper ends up paying the price. It’s only a matter of time.

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    • Thanks. I was getting tired of all the articles trumpeting rewards, rewards, rewards, without ever saying how much you have to spend to get said rewards. Credit cards are definitely a divisive issue in the PF community. Maybe for PF bloggers (who monitor their finances religiously) they can be ok – maybe. For everyone else, I think it’s too dangerous. Thanks again.

  1. Well done, Chris. Not using a card really is the simplest way to avoid debt struggles, I can’t argue that at all.

    IF you decide rewards points are for you, you’d better also decide that discipline and a will to say ‘no’ are also for you.

    Great post,

  2. Pingback: Financial Knowledge is Only Power if You Actually Use It - CYinnovations

  3. Pingback: Financial Knowledge is Only Power if You Actually Use It - CYinnovations

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