The Downside Of Using 'Rewards' Credit Cards
PHILADELPHIA (CBS) -- Do you enjoy earning perks like airline miles, points towards free hotel rooms and even cash back from your credit cards?
For many, playing the "rewards game" can lead to some big payouts, but there can also be a downside.
Louis DeNicola loves getting rewards for his spending- and he isn't loyal to just one card.
"I have about 15-17 different rewards credit cards right now," he says.
Reward credit cards that earn him things like free flights or hotel stays.
And experts say now, more people who play the "reward game" are like Louis.
"It used to be that earning rewards was all about staying loyal to one airline or one card. Now it's about applying for a card to get that sign up bonus, then spending enough to reach the minimum threshold of spending. Then a few months later, finding another card and doing the same thing," Matt Schulz, Senior Industry Analyst from reditcards.com explains.
Minimum thresholds that can range from $250 to $4000 in the first three months as a cardholder in order to qualify for rewards.
Louis says he only uses his cards for things he'd typically purchase, but, "there's definitely a pull when you have a rewards credit card to spend a little bit more," he says.
And that pull is something that can be a concern.
"For some people, signing up for a reward credit card can serve as an enormously powerful trigger to start overshopping," April Benson, a psychologist with Stop Overshopping, explains.
Although the upsides to reward cards can include cash back and travel, the key is to stay organized.
"You just have to make sure that you're keeping an eye on things, that you're not applying for too many cards too often, cause it can hurt your score. And also that you're not overspending to get those rewards, cause that can really get you in trouble," Schulz advises.
