Dave Advises on Credit Card Rewards Plans Versus Debit Cards

March 14, 2017


Dear Dave,
We’re trying to get control of our finances, and my husband wants to close all our credit cards.
I want to keep one and use the bill-pay option for monthly stuff like utilities, so we can keep earning rewards points.
I look at my way as a method of just re-routing the money and paying it off each month.
Am I wrong in looking at it like this?

Dear Cheryl,
Yes, you are.
Life never goes as planned.
You can have all the well-reasoned and best-intentioned ideas you want, but sooner or later something will go wrong.
Why not use a debit card that has a rewards system attached?
Lots of debit card programs offer the same kinds of rewards programs that credit card companies do, with one big exception — you don’t have to go into debt!
Studies have shown that the vast majority of people never redeem their credit card airline miles.
Other studies show that people spend more when using credit cards as opposed to cash.
That extra money you spend on things you don’t need is money you could have been saving and investing.
So, where’s the reward?