Are Reward Points Worth A Higher APR?

Jared writes:

Dear Consumerist,

I was performing my new monthly task of calling all of my credit companies and asking for a lower rate. One of our cards is a Citi Premier Pass, which is part of the “Thank You” Network. We got the card for the balance transfer and for our honeymoon (they offer triple points for purchases on cruise ships) and in the end, we got $100 in Amazon gift certificates and a $10 Starbucks card – but I digress.

I asked the CSR last night if I was able to get a lower rate on the card. She pulled up my account information and told me that, no, we weren’t, because the card is already at the lowest rate possible, which is the 14.24% listed on the website. I asked her why that was the lowest rate, and she said that it was because of the rewards that the card offered.

My question is: do all rewards cause the APR of a credit card to go up, and if this is the case, is the points pay-off worth the higher APR?

~ Jared


No, it’s not worth it. Reward points are for people who do not have a balance on their credit card. If you have a balance (and we’re going to assume that you do because you’re concerned about your APR) that should be your primary concern.

Get the lowest interest rate you can. Period. Then pay your balance off as quickly as you can. Carrying a balance on your card negates any “savings” you’re getting from the reward points.

If you have no balance on the card, then by all means take the card that offers the highest rewards, regardless of APR. If you’re not paying interest, why do you care what the rate is? Just make sure that you really will pay your balance in full, because reward points are intended to entice you to spend more than you can afford.

(Photo:el en houston)


Edit Your Comment

  1. B says:

    They are if you are able to pay off your bill in full every month.

  2. He says:

    In my experience rewards are always a worse deal than outright cash back. But not all retailers take Discover.

  3. brew400 says:

    *hint hint*
    dont use a credit card, if you cant afford it then you dont need it

    • tonberryqueen says:

      A lot of people don’t use credit cards because they can’t afford something. They use them for the convenience.

      I use mine like a debit card (I transfer money over out of my bank account to pay off purchases). I find it more convenient to pay for gas, groceries, and going out than taking out cash (I like to keep $20 of cash on me, max). I also happen to make a lot of online purchases, because I like purchasing things like detergent and cat food in bulk at a lower unit price that way.

  4. Fuzz says:

    I’ve been getting rewards for 10 years now. I think it is great. It encourages me to use my credit card instead of my bank card, so I don’t have to pay ridiculous fees, I can track my spending because it is all in one place, and I always pay off my monthly balance(well, except for a few times when I was a poor university student). I love my points. Free stuff is great. As long as you don’t forget to pay of your balance, it works out well.

  5. Thrust says:

    “Points” cards are a scam. Here’s some Cred for thought.

    Airmiles/Aeroplan/etc – You need what, a hundred million points to go from Seattle to Tacoma? I worked for Shell when I was in college. People would spend LOTS of cash on crap because of airmiles rewards. Examples:

    – Get 2 free Airmiles when you buy any Cadbury chocobar. Airmiles are valued at something around .1 cents each, but if you spend $1.29+GST on a chocolate bar of the COMPANY’S choosing (usually one we got backstock of, promo priced, or near expiry) you get a whole Two airmiles. Plus, in the small print, you must have ALSO purchased at least $20 of fuel or there is no airmiles.

    -Double the Airmiles Reward Miles for filling up with Gold Premium Gas. Again, value of an airmile? Nothing. Price between Gold and Bronze gas, $.06 per litre. You get ONE airmile for twenty bucks of gas, plus ONE mile for every ten bucks after the first 20. So typical fifty buck fill cost you now $53 for using gold, you get four airmiles, double coupon for gold makes it 8. So for $0.008 worth of airmiles you’re out $3.00 (possibly MORE if you skipped a lower cost station to shop at Shell). But I have the double-points GOLD airmiles membership AND I’m using an Airmiles earning Creditcard… Ok. The double coupon does NOT double the gold-status. Same 50/53 fill now earns (4*2)+4 miles (only the base miles double on the gold card, not any bonus miles). Then for using the creditcard to pay you get what, 5 more miles (I believe its 1 mile/$10). So you’re up to 17 miles ($0.017 worth) for a cost of $3 for the gas and NOW you pay interest on the purchase, with a higher APR because it’s a points creditcard. At this staggering of earnings do you want the $1.29 chocolate bar for the two extra points sir?

    • tonberryqueen says:

      I’d say points are a scam if you’re buying something specifically to get them. (Kind of how I feel about a lot of manufacturer’s coupons in the grocery/drug store…unless it’s something more or less non-perishable that I actually use, which is pretty much limited to deodorant, detergent, or soap, I’m really not getting a good deal.)

      I use my rewards credit card like a debit card. I pay for my gas, groceries, dinner and bar tabs, and public transit card refills and auto-pay my phone bill. I transfer over money from my bank account every week. No need to carry around a bunch of cash, and I slowly build up rewards points to eventually trade in for cash (when, after a year or two, the accumulated charges have added up to enough for the conversion rate to be worth it).

      Unless you’re buying a lot of big items on a rewards card, like, say, frequent airline tickets, you should expect those rewards to build very slowly, and you certainly shouldn’t buy something just to build up your points.

  6. foghat81 says:

    “Points” cards are only “scams” if stupid people are using them (like what “Thrust” describes above).

    Carry no balance and earn a reward for purchases you would have made anyway. That’s the ONLY way to do it. Anything else and you’re in the “scam” territory…..but I like to think it’s more a tax for stupid people, not so much a scam :) Kind of like the lottery.

  7. enm4r says:

    @brew400: Why does something like this come up in every single credit card thread? You do realize people choose to use a credit card because they enjoy the convenience, the protection, and the benefits? The non credit card users are worse than all the Apple fanboys (I own a MBP myself) who run into every PC customer service thread and chime in with “Should have bought a Mac.”

    I say go with the higher APR if you keep a very minimal to no balance. Of my two credit cards, I use the one that offers the most rewards, even though the APR is almost 2 points higher. It’s not a big deal, as the balance is minimal or nonexistant.

    As nice as cash back is, you can easily wipe out a years rewards with the interst paid if you keep a high balance. In which case, obviously, it would not be worth it.

  8. anatak says:

    WOW! Nice rundown there. Thats a game I’m quite happy not playing. You can clearly see who’s winning that one, and its not you.

  9. lilyHaze says:

    I love my rewards card (in the 3 or 4 years I’ve had it, I’ve gotten over $500 in gift cards). Of course I also pay the balance every month. Even though the card isn’t the lowest APR I could ever get, it’s not bad. Last time I checked it was like the prime + 1 or something like that.

  10. alpha says:


    *hint hint* use a credit card responsibly. Buy things you have the money for. Use a credit card like cash, but just with the convenience of not having to carry cash. Sure you could use a debit card, but then you miss out on some benefits of credit cards.

    Credit cards are not evil. People are just stupid.

  11. crnk says:

    How do APR and reward points have anything to do with each other? I think people on here and other savvy shoppers will fall into 2 groups here:
    Those who don’t care what APR they have because everything is always paid off and the interest is irrelevant.
    And, those who want the lowest rate possible because they have a balance and don’t look much at the other benefits.

  12. nequam says:

    Yikes! Sounds like Jared carries balances on multiple cards.

    A points card is good if you place your monthly expenses on it (cable, utils., cell phone, etc). These are items that you need to pay in full every month anyways. So you should have no trouble (barring a lack of discipline) to pay off that balance every month (even if you keep balances on other cards). It’s a good way to accumulate points regardless of the APR.

  13. shertzerj says:


    Thank you. I love reading Consumerist but I hate it how in all these credit card posts people make comments about how the Credit Card is the 13th Son of The Devil (and the like). Credit cards are great if you can manage your money. I do agree that if you can’t manage your money then you probably shouldn’t have one. I pay my card in full now and enjoy the rewards points. That’s how I got my Nintendo DS. :P

  14. beavis88 says:

    If the bank has a clause that allows them to jack my APR up to 29% if I’m late on a payment (or look at them funny), I don’t do business with them. No, I don’t carry a balance on a regular basis, I just don’t think it’s the sort of corporate asshattery we as consumers should encourage.

    Now if I could find a card where this clause was a little more reasonable, that also offered rewards points, I’d say jump on it. As it is, I’m content with my no-rewards credit union issued Visa where they can’t decide to lose my payment for the month (MBNA – I’m looking at you) then immediately shoot my interest rate through the roof (plus penalties, fees, and castration).

    Yeah yeah, banks have to protect their interests too – I have no problem with that. They just shouldn’t be surprised if I don’t like the way they go about it and choose to do business with entities that grant me a tiny bit of respect.

  15. JustAGuy2 says:

    Rewards cards are wonderful – just used points to buy two plane tickets that would have been $10k each had I paid cash.

  16. B says:

    If you’re a generally irresponsible person like I am, but still want the benefit of reward points, just use two credit cards. One, with reward points, which you use and pay off as much you an every month. Then have a second card which offers 0% APR on balance transfers, and whenever you get in trouble, transfer the balance from the high APR card to the 0% one. And set up a payment plan where you’ll have it all paid off in 6 months, or however long the 0% APR lasts.

  17. notallcompaniesarebad says:

    That image you are using is actually of a night club. Not important to the story, but interesting I suppose to someone.

  18. notallcompaniesarebad says:

    And because I sent the last post too early, here is a link: []

  19. Chiming in as one of those annoying people with no balance and lots of rewards. As our household card, we have a National City VISA that pays us 1% in cash at year’s end. When we got married, we put all our wedding expenses on it, and racked up beaucoup cash at the end of the year.

    For my personal credit card, I have Amazon Visa. 1 point for every dollar you spend, 3 points for every dollar you spend on Amazon for stuff I wanted anyway. Every 2500 points, I get a $25 gift certificate, so I treat myself to a book or cards for the digital camera. I’m a fan of both, particularly the cashback card, but there’s not a lot of cards that do that anymore. Discover, but that’s not accepted everywhere.

  20. jaredharley says:

    @nequam: Yeah, Jared does :) We’re also on our way out of debt – my wife and I both just graduated college last year and bought a house, so it’s a long road, but we’re on our way down it. Now that we both have steady paychecks, it’s a lot easier – but until we do get those balances paid off, I want to pay the credit card companies as little overhead as possible.

  21. savvy9999 says:

    screw points or miles. I use cashback cards only, for everything– purchases, utilities– paid off in full every month. Then twice a year I take that money and pile it into a Roth IRA.

    A 1-5% immediate return on every purchase I make this year, which will in turn be returning 8-10% year over year in my IRA.

    Free money making even more money is awesome

  22. Thrust says:

    Ok. Here’s more info on Points cards, good or bad.

    I have an HBC rewards card. Not the creditcard, just the points card. They keep trying to sell me on the credcard with double points earning and first purchase is $50 off. Do not want!

    I have the regular old card, I use it when I shop at HBC stores (usually Zellers). I do not even THINK about the dumb thing when I shop. If I happen to shop at Zellers, its not because I earn points, its because they have something I want for a better price than the other stores in the area. Since the points do not in ANY way affect my spending habits, the card ROCKS. One day, if I end up with a new Wii controller by spending all my points, I’m happy. Also, if I never get anything at all EVER, I’m still happy, because these points are not costing me anything.

    THAT is how points work for YOU.

    In theory nothing is free, in practice only air is free (for now). Most company rewards programs are there to be a win-win, but none of them are a fifty-fifty. Typical rewards value at one percent or less. Shit, I can usually talk someone down to at least a ten percent discount myself. Always go for a better price on ANYTHING rather than a free gift, reward, etc.

    Good member discounts (in my exprerience)…
    -Subway card. Eat 7 subs, get one free. Nice deal, thats a 14% discount for customer loyalty. Even if they up it to 10 for 1 free you’re still WELL above Aeropoints averages of .1% or less. Newyork Fries had similar cards, so did 7-11 for their slurpees. Very common VERY effective promo.

    -Safeway Club Card. (In Canada I can attest to, don’t know US) Club card is a free membership that doesn’t earn points, but almost all sale items are only SALE to club members. Typical example, Pizza Pops. $4 a box, club price @ 2 boxes for $6. Not a bad deal for a free card. And card members will love that the first tuesday of every month is 10% off your total bill (even after all club card savings). 10% Tuesday rocks.

    -Any points card which you get points NO MATTER HOW MUCH OR LITTLE YOU SPEND. If you get points on the dollar value, better not be a minimum that must be spend or its not a deal. As I mentioned above, don’t let the points be your reason to shop, but if you’re careful about your shopping habits, its free stuff for buying what you were gonna buy anyways.

    -CHAPTERS/Indigo. If, IF you spend a lot on books, or are happy to shop online, chapters’ I-Rewards rules. It even gives you a readout at the end of the year as to how much you saved. Now I-Rewards COST MONEY to join. Only join if you spend a lot there anyways. For my $25 membership I saved over $200 last year. 10% off all books bought in store. Online… That $200 was only the amount saved for HAVING the card, didn’t include the massive savings for online. AD&D rulebook “Monster Manual” lists at $44.00 and usually goes for $50+ at a comic shop. Online price, $29.04… I’Rewards Price, $27.59… Only saved $1.45 for having the IRewards, but that’s $1.45 on top of $14.96+ saved for shopping online (and free shipping). Of the $200 it says I saved last year, it only count the $1.45, so how much more was saved that isn’t listed there? LOTS! Good deal for $25 a year.

  23. Squeezer99 says:

    rewards points > APR, as long as you pay your balance in full by the last day of the grace period

  24. anatak says:

    @shertzerj: @enm4r:

    I’m sure the apple fanboys are always looking for someone worse than they are. Why do people post anti-credit card comments? Well mostly because our vote counts as much as yours. But also because every debit card or cash post brings out the credit card mongers stroking themselves over the the 1% they get back here and the double airmiles they get there. Not to mention how savvy they are, and responsible, and how they payitoffeverymonth! No, nobody ever gets tired of hearing THAT crap over and over. And please, please tell me about your credit score. Everybody loves hearing over and over and over about how important this completely unnecessary system is. But the rewards! Oh the rewards! Can Jared please tell us more about the $10 Starbucks card and how it fits into his overall financial plan?

    At least FUZZ is honest in that “It encourages me to use my credit card…. As long as you don’t forget to pay of your balance, it works out well.” Yes, so long as you count on the best case scenario, it works out great… kinda, maybe.

    So yes, BREW400 does have a valid point. If you can’t afford the disgusting interest rate they are charging you and need to constantly call ALL of your cards to negotiate lower rates, then maybe you shouldn’t have them. Because “NO” just couldn’t be an option, could it?

    Oh and some of us feel that a real consumerist would never sign up for a 30% APR kick in the ass for a single slip up. Call me crazy.

  25. jaredharley says:

    @anatak: If you can’t afford the disgusting interest rate they are charging you and need to constantly call ALL of your cards to negotiate lower rates, then maybe you shouldn’t have them.

    I assume you were never young or naive and got yourself into something you couldn’t get out of – in fact, your family was probably independently wealthy.

    I never claimed my financial record was clean and perfect – in fact, it isn’t at all. But month-by-month, we’re lowering our debt and becoming financially free. Just because I call and ask for a lower APR (and who WOULDN’T like a lower APR!?!) doesn’t mean we keep charging things on the card – and when we do, it gets paid off immediately, and then some.

    One of the reasons I was hesitant to ask the question to the Consumerist were reactions just like these – but I decided to because I wanted to know what other people thought about rewards programs in general, and to let those who were like me – those who didn’t know – that, “hey, you may be needlessly costing yourself money by having pointless rewards.”

    And to clarify, the Starbucks was good, thank you. I had a White Chocolate Mocha with an extra shot.

  26. Andamom says:

    If you pay off your balance in full — and there is no annual fee than it might be worth it to get a rewards card. Of course, if you rarely use your credit, it may be a waste of time. For example, because I rarely use my credit card, it would take me forever to build sufficient points to get anything of value.

  27. lcerezo says:


    that depends. If you pay your balance in full at the end of the month, then they can say your APR is whatever. you will still pay 0%. If you must carry a balance, then no, go for low low apr and for love of bugs, pay more than the minimum!


  28. enm4r says:

    @anatak: 30% kick in the ass is disgusting, I agree. But isn’t getting your phone shut off for not paying? Or maybe electricity? If you don’t pay your bills, ANY kind of bills, they have consequences.

    You’re right, I too am sick of the total budgets people seem to profess. “How does that $5 you found in your pocket change your strategy at managing your monthly cash flow?!?!”

    It’s really simple though. Use a credit card like cash. I know I’d use exclusively credit even if I didn’t get cash back. One bill to pay at the end of the month, no worry about ATMs or checks, and I can keep an eye on what I spend. I think it’s pretty simple, and doesn’t require the “LOL CREDIT SHOULDN’T BE SPENDING WHAT YOU DONT HAVE!” posts that are practically assured. I don’t care how savvy or responsible something thinks they are. I care about how easy it is. And if someone’s going to give me some free money for taking the easy way out, I don’t see why I’d even have to think about that…

  29. @shertzerj & @alpha: The rest of us are tired of posts about how anyone that can’t keep a zero balance on a credit card is an idiot. I guess that makes everyone even.

  30. alpha says:

    @Rectilinear Propagation:

    Good show. Glad we could keep the status quo :)

  31. balthisar says:

    I love my AAdvantage Citi-issued rewards card. No blackouts on travel, sufficient number of seats available on the routes that I want to use miles for, the option to pay more miles if if the Saver fares aren’t available, and no pre-set spending limit (so, say, appliances and cabinets and a whole new kitchen get all of those luscious miles despite my real credit limit). I think the APR is 18% or so, but I’ve never called to reduce it because I don’t carry a balance.

    I know that lots of people say that the credit card companies call us convenience users “deadbeats,” but you know what? They get 1.5% to 3% of everything I spend. I’ve *never* had to wait on hold when calling them, so either (1) no one has to wait because their service rocks, or (2) I come up high on their call prioritization matrix meaning they like me as a customer.

    My Chase and Discover have awards, but when you start splitting your rewards amongst too many cards, then those rewards take forever to accumulate.

  32. tvh2k says:

    First, get a cash back card, not a rewards points card. They’re all scams. Discover is best because you get the $$ each month and can “cash out” at $20 increments. Emmigrant Direct CC (Juniper/Barclays) pays 1.4% every 6 months with 10,000 balance in a savings account. Don’t get one with a tiered schedule for % cash back either, unless you’re sure you’re going to spend a lot of money in the top tier. Watch out for “up to xxx% back”.

    Second, if you must carry a balance, carry it on a card with a low APR (not a cash back card). Or, better, put it on a cash back card and then pay it off with a loan.

  33. Thrust says:

    @Rectilinear Propagation: Zero balance? lol my card is almost always carrying a balance, often maxed. But I have a low LOW limit on the card and a superlow interest rate. If it were maxed the whole year, at most it would cost me a hundred bucks interest over the year. Typically it only ever added up to thirty a year. Not much to freely use money when I need it.

  34. shertzerj says:


    Heh, yeah, that’s a valid point. I only say what I say though because I’ve been on both sides of the financial fence – I went through college using credit that I shouldn’t have, acting irresponsibly and racking up bills. Now after “paying” for it (figuratively and literally) for several years post-college, I’m finally back to the point where my credit card balances are zero.

  35. mermaidshoes says:

    @b: what card do you have that offers 0% interest on any balance transfer? most cards i’ve seen require you to make the balance transfer request with the initial card application or within 6-12 months of getting the card in order to receive 0% interest, presumably to avoid people doing exactly what you’re doing. (not that you couldn’t just keep signing up for new 0% BT cards all the time…)

  36. SOhp101 says:

    of COURSE rewards cards are scams if you are carrying a balance! That’s the ultimate rule: NEVER CARRY A BALANCE. PERIOD.

    If you don’t carry a balance = you are always in the grace period = you never pay interest. simple as that.

    Treat a credit card like you would an ATM card and you’ll never have any problems again… unless you get overdraft charges constantly.

  37. B says:

    @mermaidshoes: I get offers every few months from one of my credit cards for a 0% balance transfer. Of course, the reason I get so many is I had signed up for new 0% BT cards in the past.

  38. XianZhuXuande says:

    Yep! Carry balances on your lower APR non-rewards card.
    Don’t carry your balances on the rewards card, silly.

  39. anatak says:

    I can make all kinds of assumptions about you also, but I think we all know what those lead to. Independently wealthy? No. Young and stupid once? Oh, sure. Who wasn’t? To your point, yeah, I had a ton of debt too. Its great that you’re digging yourself out of your hole. We all should be so fortunate as to have that ah-ha moment when we realize how stupid we’ve been.

    But I never insinuated anything about your financial record – good or bad – so I don’t know why you’re so pissed off. Maybe it was the crack about flaunting your $10 starbucks card (so sweet), but I digress. It seems that what really has you in a twist is the very thought that maybe you shouldn’t have the credit card. Yes, you already have it. That can’t be changed.

    Just because I call and ask for a lower APR (and who WOULDN’T like a lower APR!?!) doesn’t mean we keep charging things on the card – and when we do, it gets paid off immediately, and then some.

    So you are still using it. Right? Thats what you’re saying. You assume that I assume you’re still using it (which I didn’t), you get pissed, and then admit that you are still using it. If you really want to be “financially free”, then lose the shackles. Build up and emergency fund, put the card through the blender, and pay that sucker off. Then, it doesn’t matter what the APR is, because they don’t own you anymore. Screw them. You’re already giving them money – thats a given – why give them your time? Get intense, pay it off faster, and get them out of your life.

    One of the reasons I was hesitant to ask the question to the Consumerist were reactions just like these

    Like what? That you’ve been stupid? We’ve all been stupid – especially with money. It sounds like you’ve owned up to that, and now going in the right direction.

    – but I decided to because I wanted to know what other people thought about rewards programs in general, and to let those who were like me – those who didn’t know – that, “hey, you may be needlessly costing yourself money by having pointless rewards.”

    Good, I’m glad that you asked as opposed to unknowingly going down the wrong path. But what reaction did you not want to get? No? No, you should not bother with rewards cards? Were you just looking for validation? Looking for tales of sweet, sweet $20 Starbucks cards? No just might be an option. No, nothing is worth a high APR. Period. Done. You are working you way out of bondage. You’ve got balances on multiple cards. You’re so fed up with paying YOUR money to the credit card companies in the form of high interest that you call them monthly to attempt a lower rate. Has this been a blessing in your life? I don’t keep snakes in my pocket anymore, because I don’t like it when they bite me.

  40. mathew says:

    Rewards cards are great if you don’t carry a balance. American Express Blue Cash gives you 5% cash back once you spend enough on it. Since most places take AmEx, I use it for the groceries, medical expenses, gas, and so on. I treat the card like cash in that I only spend money once I have the money in the bank. Then every now and again I get a check for some unexpected free money and use it to treat myself to something.

    And in the mean time, I get the other benefits of using the card–free extended warranty, free return protection, free travel insurance, free car rental insurance, and so on.

    I think it’s kinda evil that we have an entire industry profiting from screwing over people who have poor financial management skills… but as long as the usury laws are lax, I might as well benefit and help reduce the credit card companies’ profits a little.

  41. TalbotD says:

    ….these ‘rewards-cards’ are often contractually linked to 3rd Party marketing companies that likely “mine” (data gather) your transaction history & buying preferences for sale or future marketing purposes.

    Read the fine print.

    Effectively, you may be selling some of your financial privacy for small ‘rewards’.

    Stick to regular bank-issued credit cards — those ‘rewards’ aren’t worth the cost to your privacy IMO.

  42. JustAGuy2 says:


    “Subway card. Eat 7 subs, get one free. Nice deal, thats a 14% discount for customer loyalty.”

    No, actually, it’s not. It’s a 12.5% discount. Say a sub is $5. You spend $35 to buy 7 subs. You then get one free. So, you’ve spent $35 to buy 8 subs. Without the card, you would have paid $40. A $5 discount on $40 is a 12.5% discount. It would also be accurate to say that you get a 14% bonus. /math pedantry

  43. Trackback says:

    I’ve discovered that I haven’t really had hot water in my new apartment since moving in. I’ve been settling for barely warm showers thinking I was just a victim of poor timing. An adjustment to the hot water heater has fixed this problem as far as I can tell.

  44. MarkMadsen'sDanceInstructor says:

    I love my rewards card, its given me a few hundred dollars back since I first got it. As for the dangers of using a credit card, if you use it like a debit card as I do, you will never carry a balance.

    The problem is that many people wait until the end of the month to pay off their balance, so at that time they may not have the money to pay off their full balance. I usually try to pay off my complete balance every single week on the same day. That way, I never forget to pay, and I never use more money than I actually have.

    Plus getting and properly using a credit card is the only way to have decent credit.