answer like a pro

“Credit cards are good because of the points.”

Write your awesome label here.
“Credit cards are worth it for the rewards.” Here’s a response that looks beyond appearances.

Credit cards: are the rewards really worth it?

Using credit cards to accumulate reward points is a common strategy and, when managed properly, can offer attractive benefits. However, this approach is only truly beneficial when paired with disciplined management. Too often, the appeal of rewards distracts from the real risks associated with credit use. It’s therefore essential to take a step back and look at the full financial picture.

Yes, the rewards are real

Credit cards offer attractive rewards: cash back, airline miles, points redeemable for products or travel, and more. Some programs, such as PC Optimum, Aeroplan, or the cash back cards offered by certain financial institutions, can generate between 1% and 4% returns on purchases in specific categories like groceries, gas, or restaurants.

In some cases, welcome bonuses can be very lucrative, especially if you meet the initial spending requirements. In addition, some premium cards include travel insurance, purchase protection, or even airport lounge access — benefits that can add significant value for those who travel frequently.

The interest trap

However, most of these benefits disappear if the user doesn’t pay their balance in full each month. Most credit cards charge an interest rate of 19% to 21% on unpaid balances. A simple $2,000 balance can therefore generate more than $400 in annual interest — far more than you would have earned in rewards. Just a few months of partial payments are enough for the cost to far exceed the benefits of the rewards program.

In other words, credit cards reward those who use them as a payment method, not as a financing tool.

The risk of overspending

Another often overlooked danger is the tendency to spend more than necessary just to accumulate more points. Studies show that consumers tend to spend more when paying with a credit card than when using cash. This is especially true when they’re chasing welcome bonuses or monthly spending thresholds to maximize rewards.

Earning points should never justify unnecessary or unplanned spending — in that case, the gain becomes purely illusory.

Annual fees and hidden conditions

Some cards offer generous rewards but charge high annual fees sometimes between $120 and $600. To make these fees worthwhile, you need to ensure that the value of the rewards exceeds the yearly cost. In addition, the points you earn often come with conditions: expiration dates, redemption restrictions, limited reward availability, or unclear and adjustable conversion rates.

In conclusion

Credit cards can indeed offer attractive rewards… for consumers who are disciplined, informed, and able to pay their balance in full each month. For everyone else, the risks of interest charges, overspending, and poor management can quickly derail a strategy that once seemed profitable. Before choosing a card for its rewards, it’s crucial to examine your financial habits, your ability to manage credit, and your spending behavior. A credit card is never truly free even when it promises gifts.

Sources :

  • Scotiabank – “Advantages and Disadvantages of Credit Cards”
    https://www.scotiabank.com/ca/fr/particuliers/conseils-plus/articles-de-fonds/posts.avantages-et-inconvenients-des-cartes-de-credit.html
  • Ratehub – “How to Assign a Value to Credit Card Points”
    https://www.ratehub.ca/cartes-de-credit/comment-attribuer-une-valeur-aux-points-des-cartes-de-credit
  • Milesopedia – “Evaluation of Rewards Programs in Canada”
     https://milesopedia.com/evaluation-points-milles-canada/
  • KOHO – « Avantages et inconvénients d’une carte de crédit »
    https://www.koho.ca/fr/learn/pros-and-cons-of-a-credit-card/
  • La Presse – “The Traps of Reward Credit Cards”
    https://www.lapresse.ca/affaires/finances-personnelles/2020-03-06/cartes-de-credit-les-recompenses-en-valent-elles-la-peine.php