Adam McCann, Financial Writer
@adam_mcan
Three drawbacks of having a rewards credit card are high interest rates, potentially expensive annual fees, and terms and conditions that can be difficult to understand. While rewards credit cards are worth getting for many people, it’s important to understand the potential downsides before applying for one.
3 Drawbacks of Having a Rewards Credit Card
- High Interest Rates: Rewards credit cards often come with expensive interest rates, which can be a problem if you carry a balance from month to month. This can result in you paying more in interest charges than you are earning in rewards, negating the benefits of the card. Paying your balance in full every month will prevent this issue. It’s worth noting that some rewards cards have lower regular APRs than others, and there are quite a few rewards cards that also have introductory 0% APRs on purchases.
- Annual Fees: Many rewards credit cards charge an annual fee, which can be significant depending on the card and the rewards offered. This fee can eat into the value of the rewards you earn, and people who only use their card occasionally therefore might not get their money’s worth. However, there are still plenty of rewards cards without annual fees, and cards with expensive fees can often be well worth it if you spend a lot due to their high earning rates and big bonuses.
- Complex Terms and Conditions: Rewards credit cards often come with complex terms and conditions, including restrictions on how and when you can redeem rewards, limitations on the types of purchases that qualify for rewards, and expiration dates for rewards. It can be difficult to keep track of all the restrictions and requirements, and to ensure that you are getting the full value of the rewards you earn.
It is important to carefully consider these drawbacks and weigh them against the potential benefits of a rewards credit card before applying for one. It’s also worth noting that most of the best rewards credit cards require good or excellent credit for approval, though there are decent options for people with fair, limited or even bad credit. You can learn more about the best rewards credit cards on WalletHub.
Popular Rewards Credit Cards in December 2025 from Our Partners
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Everyday Cash Back
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Bonus Cash Back
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Bonus Miles
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Bonus Points
People also ask
What are the pros and cons of rewards credit cards?
The biggest pros and cons of rewards credit cards are savings with every purchase and extra secondary benefits on the positive side, and the potential for devaluation and earning caps on the negative side. Rewards credit cards can save you a lot of money when used responsibly. But they can also end up costing you if you pick the wrong card or carry a balance from month to month.
Biggest Pros and Cons of Rewards Credit...
read full answer by WalletHub, Financial CompanyWhat are the benefits of a rewards card?
The benefits of a rewards card are cash back, points or miles on every purchase, plus the ability to redeem those rewards for statement credits, gift cards, travel and more. Rewards credit cards can also provide benefits such as airport lounge access, rental car insurance, or discounts on dining and entertainment. In addition, rewards cards are available for all credit scores and often without annual fees.
Top 5 Rewards Card Benefits
- Points,...
What are the different types of credit card rewards?
There are three different types of credit card rewards: points, miles and cash back. With each type, you’ll earn rewards for every purchase you charge to the card – sometimes at a flat rate on all purchases, and other times with earning rates that vary by spending category. It’s also possible to earn rewards for doing things like spending a certain amount in the first few months, referring a friend or adding an authorized user.
... read full answer by John S Kiernan, Managing EditorDid we answer your question?
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