Big payouts, big debt in credit rewards game

Posted at 8:32 AM, Jan 29, 2016
and last updated 2016-01-29 09:05:57-05

Louis Denicola loves getting rewards for his spending, and he isn't loyal to just one card.

"I have about 15 to 17 different rewards credit cards right now," Denicola said.

The reward credit cards earn him things like free flights or hotel stays.  Matt Shulz, an Industry Analyst for says more people are playing the "rewards game."

"It used to be that earning rewards was all about staying loyal to one airline or card. Now it's about applying for a card to get that sign up bonus, then spending enough to reach the minimum threshold of spending and then a few months later finding another card and doing the same thing," Shulz said.

Minimum thresholds can range from $250 to $4,000 in the first three months for the cardholder to qualify for the rewards. Louis says he only uses his cards for things he'd typically purchase, but, "there's definitely a pull when you have rewards credit to spend a little bit more."

Psychologist April Benson says it can be addicting.

"For some people signing up for a reward credit card can severe as an enormously powerful trigger to start over shopping," Dr. Benson said.

Benson says reward cards can be very beneficial to those who use them in a healthy way, but for some, earning rewards can be an addiction, "What you see when somebody signs up for a reward credit card and gets into really big trouble with it are the signs of addiction to anything else."

Shulz points out although the upsides to reward cards can include cash back and travel, the key it to stay organized.

"You just have to make sure that you're keeping an eye on things, that you're not applying for too many cards too often because it can hurt your score. And also that you're not overspending to get those rewards because that can really get you in trouble," he said.