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There are three types of credit cards I’ll always steer clear of, including cards with rotating rewards bonuses. Here’s why.
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I’m a big fan of credit cards. In fact, I have several rewards cards and I’ve used them to cover the cost of airline flights and to earn cash back that I can invest in my brokerage account to help me accomplish important financial goals.
Despite the fact I love credit cards and see them as a valuable tool, there are three kinds of cards I will never use. Here’s what they are.
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1. Cards with rotating rewards bonuses
Many credit cards out there offer rotating rewards bonuses. These cards typically pay you 5% cash back on a specific category of spending, but only for one quarter. Then, the next quarter, they switch to paying 5% cash back on something else. For example, they might pay you 5% back on gas during one quarter and groceries during the next.
For me, there are two big problems with these cards. The biggest issue is that you typically must activate the “bonus” category in order for it to go into effect. And you have to do this every single quarter. If you don’t remember to activate the bonus category, then you’ll get stuck earning just 1% cash back, which is a really low rate.
The second problem is that you have to keep track of which category is giving you the bonus spending at any given time. And if you don’t want to get stuck with the paltry cash back on other kinds of spending, you’ll need to use a different card for non-bonus purchases.
I don’t want to deal with this much hassle. I would rather just use a card that makes it easy by offering me a more generous rate on all the spending I do without requiring me to take any extra steps to get it.
2. Store cards
Store credit cards are another kind of credit card I steer clear of. And there’s two reasons for that as well.
One issue is that these cards have higher interest rates. That’s not a huge concern for me since I never carry a balance. But, if I did happen to need to borrow for a month or two before paying off my balance in full, I wouldn’t want to take a chance of having to pay it at the very high rate store cards generally charge.
The bigger problem for me is that the rewards on store credit cards aren’t usually very good. Usually, you only get rewards you can use in the store that offers the card. And, in a lot of cases, you have to spend more to use the rewards or use them within a certain time. All of this means I could be forced to actually buy stuff I don’t want just to use the credit card rewards that store cards offer.
3. Cards that don’t offer rewards
Finally, the last type of credit cards I’ll steer clear of are those that don’t offer rewards at all. With so many great rewards cards out there, there’s absolutely no reason for me to choose a card that doesn’t give me cash back or points for spending — especially since I have good credit and can qualify for any card I want.
There are good reasons I steer clear of each of these three kinds of cards — and you may also want to avoid them as well, since you can find credit cards that don’t come with these downsides.
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