By Sean A. Kelly

Overspending and excessive use of credit cards may be among the major contributing factors towards overwhelming debts for many people. When you find yourself buried deep in debt and you have no idea how to pay, you may have to sign up with debt management companies such as Freedom Debt Relief. Research has shown that avid credit card users may be more susceptible to incurring overwhelming debts. However, there may be something that may be more financially dangerous than credit cards; credit cards with rewards. Many credit card companies use tantalizing rewards offers as their marketing strategy to attract new clients. Consumers apply for a variety of reward credit cards to get more from their spending.

Of course, who wouldn’t like to win prizes and receive gifts such as airline tickets and discounts at restaurants? Getting rewarded may be thrilling, but there may also be some major risks attached. You may have to be extra careful with your rewards credit cards because they may put you in bad credit situations a lot faster than regular credit cards. Logically, credit card companies may want you to spend more on their credit cards. So they tempt you with mouthwatering rewards. However, in order to be rewarded, you may end up spending more than you probably would without the temptations of their rewards. More spending may later turn into more debts. If you are spending more to get the rewards from each credit card you own, you may be putting yourself at risk.

You may want to take some time to put each of your credit cards under a magnifying glass. You may notice that the credit cards with rewards may often carry significantly higher interest rates compared to regular credit cards. The danger is when you do not pay your outstanding balance in full. Sometimes the annual percentage rate (APR) of rewards credit cards may range from 15% to 19%. Generally if the rewards are big, the interest rate may also be higher. Carrying over your outstanding balance to the following month may cause you to pay extra charges that perhaps may eventually offset the value of the rewards you get. To make matters worse, you may find that you may no longer be eligible to claim the rewards you think you could get because of the late payments you have been making. So your rewards credit cards probably put you in a lose-lose situation.

Many credit card companies offer rewards in points that may be exchangeable for gifts or airline tickets. These points usually have expiry dates. Therefore you may feel like you have to spend as much as you can to acquire enough points to be able to exchange it for the item you want before the points expire. Credit card companies rarely notify their consumers when their points are expiring. So you may be spending more and more to gain points but you may have no idea whether the points you earned on your previous spending may still be used or otherwise. Before you know it, you may actually have more expired than usable points. When this happens, you may not be getting the rewards you want but your debts may still be accumulating due to your endless spending.

If you do not wish to end up with debts that you probably cannot afford to pay, you may want to rethink about applying for credit cards with rewards. Of course, if you have the strength of will to control your spending habit and you are able to focus on the consequences of bad spending habits as opposed to the rewards you could get if you spend more then by all means you may get to enjoy the rewards of your credit card. Basically, it all depends on you.

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