We use credit cards for travel points, but does that make sense or are we getting fleeced?

Responsible credit card usage over a prolonged period of time really can build up enough travel points for one to cover the entirety of one’s hotel stay or the entire trip. It’s not just points that bring real value to those who credit card swipers. A wealth of other perks, bonuses, travel and mobile insurance coverage, and consumer protections make credit cards stand head and shoulders above paying with debit cards and cash.

Additionally, building credit is perhaps the best perk of all for younger Americans. Of course, not every credit card offers as much value as the price of admission, especially if we’re talking about the cards that command hefty annual (or monthly) fees. Indeed, there can be a dark side to credit cards, especially for those who haven’t done their homework prior to signing the dotted line. For instance, some brand-specific credit cards (perhaps ones tied to a retailer) may not offer a great bang for the buck.

Using one’s credit card to collect points does make a lot of sense.

Though I wouldn’t say you’d be getting “fleeced” for using one, I do think that one wouldn’t get as much value as they would have with a card that was more suitable for one’s spending patterns. For instance, if you never shop at a specific retailer or don’t care to fly with the same airline every time you book a flight, you probably won’t be happy with the return on points you’ll get from using the card. Of course, alluring sign-up bonuses could cause many to sign up for a card that just isn’t right for their needs.

In any case, I’m a firm believer that it’s not worth paying that hefty annual fee if you’re not getting mileage out of your credit card. Sure, you’re going to take a painful hit right on the credit card as you cancel. But a dinged credit score is repairable, especially if one already has a decent credit score from a lengthy history of on-time payments.

In any case, even for those who don’t travel all too often, I’d explore alternative ways to put accumulated travel points to better use. Some points are actually quite versatile, allowing users to spend down points on discretionary items or as a credit on their monthly statement. If points do stand to expire, many firms also allow such points to be donated to charitable causes. As always, it pays to swipe one’s credit card over the debit card for those who don’t leave balances long enough to build up interest.

The bottom line

Not getting as much value from an expensive credit card can leave one feeling like they’re getting a raw deal. That said, I wouldn’t go as far as to say one is getting “fleeced” by continuing to use a credit card over a debit card, which would have yielded nothing. Additionally, perhaps other perks that (including fraud protection) offer immense value that one can’t see. In my view, an individual is “fleecing” themselves by using a debit card over a credit card, assuming the monthly bill will be paid off in time.

Either way, if you’re not happy with your credit card, it’s never too late to cancel and switch to one that can better meet your needs. For frequent travellers, the annual fee may be the cost of scoring rewards that just aren’t possible with those modest” free” ones aimed at younger consumers.

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