Are Credit Rewards Worth the Hype?

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Ads for credit cards that offer rewards are very common on TV and the Internet. One famous commercial asks potential cardholders what’s in their wallet, and this can lead to the follow-up question of whether these rewards are worth the hype.

Travel Cards

The advertisement noted above is a travel rewards card. These cards can really pay off for those who figure out how to use them best. Most come with a signup bonus that can pay for a free flight or a few free nights in a nice hotel. 

These bonuses come after a new cardholder completes a minimum spend that will usually range between $1,000 and $5,000 over the first 90 days the account is open. 

Additionally, everyday spending can earn more points. Other cards offer rebates for travel that usually gives a value of one penny per point. For those who like to travel, these cards can really pay off and provide value.

Cash-Back Cards

Another popular type of credit card is the cash-back card. These frequently offer signup bonuses. However, the bonuses on cash-back cards are for a given dollar amount instead of bonus miles. They also earn points for every dollar spent. Sometimes, there are bonus categories. 

According to the experts at SoFi, even without bonuses, cash back rewards can really pay off. Those who spend $1,000 a month could receive $20 in rewards with a card that pays 2% cash back. Those who spend more can get the same percentage back on their higher spending.

How To Redeem Rewards

There are several options for redeeming the points from cash-back cards. It’s possible to just apply them as a statement credit that reduces the monthly credit card bill. Another option is cashing the points in for gift cards to major restaurants and retailers. 

Some of these gift cards are tied to airlines or hotels, so a cash-back card could also double as a travel rewards card. Finally, some cards allow users to request a paper check. This last option might be beneficial for people who are looking to save up for a specific purpose.

Investing With Cards

There are a couple of credit cards that are tied to major brokerages. These are effectively cash-back cards that allow users to transfer their rewards into a brokerage account. Over time, these rewards can start to compound, which will allow them to provide even more benefits than a mere statement credit or check.


There is a risk that can come from using credit cards. That’s interest. Those who fail to pay off a credit card in full every month will not come out ahead, regardless of any benefits the card might offer. Interest rates on credit cards usually reach double digits, and some exceed 20% annually. Therefore, those who might get into debt with cards will want to avoid them.

Cash back rewards can pay off for those who use cards responsibly. Merchants tend to charge the same for those who pay with cards and those who pay with cash. Therefore, taking advantage of rewards can allow responsible users to get ahead financially over time.


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