Reward credit cards can be a benefit or they can be a detriment it all depends on how you make use of them. If you use a reward card responsibly like you do all of your other credit options, they can definitely work to your advantage. The finest rewards cards are the ones that pay you in the form of medium that can be spent like a gift card. You can earn frequent flyer miles or savings bonds. Others give points that can be exchanged for merchandise and others give you cash back.
If you are not a very organized person, reward cards can become a nuisance. There is always the risk of overspending just to get that 1 or 2 percent reward. But, as long as you use the card with some restraint and/or pay off the balance every month, the reward becomes a pleasant bonus that pops up every once in a while. If you get carried away, the reward becomes an occasional reminder of your lack of responsibility.
You should never buy only to get the points or cash back unless you can pay for it totally once a month. The interest that you will pay by doing credit purchasing instead of cash will far outweigh any reward you obtain. Many use reward cards very responsibly with little interest cost and get the reward too.
The reason credit card companies give the rewards are to persuade you to make needless charges so the bank can pile up profits from the interest that they charge. Paying 20% interest to get 1% cash back is a bad deal every single time. The bank is betting 1% of your charges every month that you are too weak to keep from charging more than you can repay each month. They almost always win that bet over time.
You only have to let your balance coast over one or two months per year to eliminate any of the benefits you would have gained from the rewards. Some people shop only with their reward credit card and keep the cash in the bank to pay it off at the end of the month; thus building many points toward their rewards. But, if you are one who cannot hold on to your money this definitely will not work for you. A single late fee or even two will make the bank the winner, and you will get a hit on your credit report. This may even lead to revoking your accumulated but uncollected rewards, an increase in interest charges, and a bigger minimum payment.
You should never get a card just for the rewards program. If you’re going to charge anyway, it can be a little bonus.