I’m one of those people who thinks that the credit card can be a great personal finance tool — when it’s used correctly. If you have a good rewards program, or if your credit card offers some decent perks, then you can do well with a credit card. As long as you only use it to buy what you can afford, and are careful to pay off your credit card every month, I think a credit card can be a good way to earn free stuff.
Unfortunately, we are seeing changes to credit card perks and rewards programs. Five Cent Nickel recently commented on the fact that Citi is reducing the amount of travel insurance it offers on its credit cards. And there are several other instances of shrinking rewards and rising credit card fees. These new developments are severely limiting the advantages of having a credit card. It would be nice if credit card issuers simply cut some of the lesser-known perks and left it at that, but this is not likely to be the case. Rather, credit card issuers are most likely to cut perks and raise fees while cutting rewards.
For those who are deep in credit card debt, there is little that can be done. And the interest charges erase the benefits associated with rewards and perks anyway. However, for those who have been using credit cards with discipline and as financial tools, it may mean that a new tactic will have to be found.
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