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Choosing a Credit Card Which Works for You

By Kevin Kelly

Point-based reward programs with credit cards are popular in Western Australia and with two thirds of credit cards on the market having these programs, it’s easy to be enticed by offers without reading the fine print.

Using credit cards with these reward programs could, in fact, actually send you deeper into debt. The rewards work as a lure to spend more on your credit card, rather than using your savings account, but if you don’t clear the debt regularly, people can find themselves in some debt.

A key reason is interest rates.

In general, rewards cards will attract a higher interest rate than your non-rewards cards, with there being on average a 5 per cent difference in the interest rate, and this is without factoring in the higher annual fee they charge.

So if you can’t pay off your card in full each month, the cost of the card interest rate plus annual fee could easily outweigh any rewards benefit you may receive.

If this is the case you might want to opt for a low-cost card instead.

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