Experts Warn: Beware of the Perks Credit Card Companies Offer

Credit card companies may offer you rewards they call miles, which they say can be redeemed for trips. If you are a student, they may offer you free T-shirts or calling cards. You may be offered the chance to earn money to purchase food or merchandise. You might even be offered the chance to earn money toward the purchase of a new car. Whatever reward they offer, some experts say to beware of any perks or rewards credit card companies offer you to get one of their cards-especially if you are a student.

Dave Ramsey, author of The Total Money Makeover, said getting a credit card in hopes of saving enough miles to be able to take an anticipated trip is a bad idea for many reasons-especially for students. He said using a credit card enough to have enough miles for a trip would cause any person to have massive debt-and while that is a bad idea for anyone, it will end up being especially bad for college students. In addition, he said credit card companies place enough restrictions on using the miles that for someone hoping to use the miles to take a trip, "Jupiter has to align with Mars while you're standing on one leg," to actually take a trip using credit card miles.

Ramsey said statistics from Consumer Reports show that 78% of credit card miles are never redeemed. He said that he is not opposed to anyone taking a trip for recreation, but if one wants to do so, he or she is much better off to save for the trip than to try to use the perk of miles from a credit card company.

According to an article in the Michigan Daily, Starbucks, in cooperation with Bank One, offers a credit card that allows users to basic charge card while earning money toward Starbucks food and merchandise. That credit card is not unique, either. Other credit card companies offer rewards or perks that can allow a person to earn money toward the purchase of a car.