Can we talk about how people treat card rewards like free money?

I see it all the time in my social circle. Folks will put a big vacation on a travel card thinking they're gaming the system, but they forget the interest rate is 25% if they miss a payment. My buddy in Austin did this last summer. He put $4,000 on a card for the points, then got hit with a late fee and interest that ate up any value he got back. I worked at a credit union for 6 years, and I can't tell you how many people came in shocked that their 'free' flight actually cost them more in the long run. The fine print says rewards are only worth it if you pay the balance in full every month. Am I the only one who notices this disconnect?

3 comments

3 Comments

hollyg598d ago

@caseym48 Wait people really don't read the fine print before swiping?

caseym488d ago

Right, the "free flight" trap. People treat the points like found money but forget that plastic is still a loan with killer interest.

uma6853d ago

Caseym48 said 'free flight trap' and that's exactly it. But I'd gently push back on one thing - it's not always the fine print people miss. It's more like they understand the rules but convince themselves they'll be the exception. I've seen friends who know exactly how interest works still do the math wrong. They'll carry a $200 balance for a couple months thinking 'it's only a few dollars in interest' and completely forget that those points they earned were worth maybe $30 total. The real trap is thinking you're smarter than the bank's formulas when you're really just lining up for their game.