Are the rewards programs offered by banks to entice customers to use their branded credit cards worth it? The answer, on the surface, would appear to be simple: absolutely. After all, if a bank has a marketing tie-in with an airline or hotel chain, and that means a consumer who uses the bank’s credit card gets miles or room discounts, what’s the harm? Technically, there is no reason whatsoever to avoid credit card rewards programs – if you are a responsible user of credit cards who pays them off quickly.

A CPA in Tampa from Reliance Consulting, LLC, can explain how the use of credit cards affects your ability to maintain a responsible budget that will help you achieve your long-term financial goals. Credit card debt is almost always considered “bad” debt. That is, debt that potentially hampers cash flow, is tied to a relatively high interest rate, and does very little for an individual consumer’s credit rating beyond damaging it if the payments are not made on time. Credit card spending limits, while not technically considered “debt,” can sometimes count against consumers who seek to purchase a home or refinance a mortgage. Another thing to remember is that it is not wise to make purchases just to elevate your total points or miles.

On the other hand, if you use your credit card anyway – and use it responsibly – a rewards program is a fine way to get those benefits a little bit faster than you would otherwise. Just be aware of a couple of things if you are confronted with an irresistible offer from a credit card company:

• Know the potential tax ramifications for incentive “gifts” presented by the bank upon approval
• Know the fees associated with the card and be prepared to pay them before they are due

For more advice on budgeting and personal credit, contact Reliance Consulting today.