Credit Card Rewards: The Trick Behind “Free Money”

Ah yes, the credit card rewards program—the shiny bait dangled in front of you, promising “free” money, “free” travel, and “free” perks, just for using your credit card. Sounds amazing, right? I mean, who wouldn’t want to get paid for spending money? That’s like eating donuts and losing weight at the same time! But here’s the truth: credit card companies aren’t handing out freebies because they like you. Nope, they are in business to make money—and lots of it. They know that when they dangle a little reward in front of you, you’ll be more likely to spend, spend, spend. And when you spend more, they win. It’s a classic trick, and millions of people fall for it every day.

The Illusion of “Earning” Rewards

Here’s how they sell it: “Spend $1,000 and get 1% cash back!” Wow. One. Whole. Percent. That’s right, for every $100 you spend, you get $1 back. That means if you rack up $10,000 in purchases, you get a whopping $100. You know what else you could do with $100? Literally anything that doesn’t involve going into debt for the privilege. Maybe a nice dinner? A few months of a streaming service? Certainly not enough to offset how much you just spent to “earn” it.

But wait, there’s more! Some cards offer 5% back on specific categories! That means if you spend $500 on gas, you get $25 back! Incredible! Except for the part where gas prices are rising faster than your reward points are accumulating. And let’s not forget how those “categories” change every few months, making you jump through hoops to actually take advantage of them. One month it’s restaurants, next month it’s office supplies. Hope you enjoy eating printer ink!

And don’t forget those tricky redemption rules! You might not actually see that cash back for months, or worse, you have to hit some mysterious “threshold” before you can claim it. Oh, and if you forget? Poof—your “reward” disappears into the banking abyss. So generous of them, really.

The “Points” Game: Designed to Keep You Hooked

Maybe you prefer points instead of cash back. Ooh, fancy. You love racking up those sweet, sweet airline miles! But have you ever noticed that just when you finally have enough points to book that dream trip to Hawaii, the airline magically “adjusts” its redemption policy? That flight that used to cost 25,000 points now requires 50,000? Weird how that works. Almost like they don’t actually want you to get free stuff.

Let’s not forget about expiration dates. Some points vanish if you don’t use them quickly enough, forcing you to spend more just to make use of what you already “earned.” It’s basically like a Chuck E. Cheese token system for adults, except instead of a cheap plastic toy, you get the privilege of paying annual fees.

Interest Rates: The Real “Reward”

Now, let’s get to the part where credit card companies make their real money. The average credit card interest rate sits somewhere between 20-30%, but some, like Kohl’s Capital One card, are in excess of 30%! Shame on you, Kohl’s. Not only are you charging sky-high interest rates, but you’ve also got one of the most ridiculous reward scams out there.

Kohl’s gives you “Kohl’s Cash,” which sounds like a sweet deal until you realize you can only use it within a short window—and only if you pay with their credit card. So let’s break that down: they lure you in with fake money, force you to spend more to use it, and charge you a predatory interest rate if you don’t pay your balance in full. That’s not a reward system—it’s a financial trap disguised as a perk.

You spend $1,000, and if you only pay the minimum, congratulations! You’ve now turned that $1,000 into $2,500 over time. But hey, at least you got a free toaster oven out of the deal, right? (Oh wait, no—they discontinued that reward last month. Try again.)

EXAMPLE: And here’s a real kicker. Let’s say you put a $40 sweatshirt (with a 15% discount) on your Kohl’s credit card. You already have a $400 balance, and you only make minimum payments. That sweatshirt will end up costing you $576.26 after interest. That’s right—your “deal” just turned into a luxury-priced hoodie, all thanks to 30% interest rates and minimum payments that barely touch the balance. Kohl’s must be laughing all the way to the bank!

Annual Fees: Paying for the Privilege of Getting Scammed

Oh, and let’s talk about premium rewards cards. The ones with the really good perks. Free airport lounge access, travel credits, first-class upgrades! All for the low, low price of $695 per year! What a steal! (For the bank, not for you.)

You’re basically paying a subscription fee to your own financial servitude. And let’s be honest, how often are you really using that airport lounge? Unless you’re jet-setting every month, you’re probably paying for a fancy chair and stale peanuts you could’ve bought for $3 at the grocery store.

But wait! They throw in a “travel credit” to make you feel better. Except that credit usually comes with so many restrictions, it’s like trying to use a coupon at a store that doesn’t accept coupons. You’ll end up spending more just to use your so-called benefit.

And let’s not forget, some cards have the audacity to charge an annual fee and high interest rates. So, you’re paying just to have the privilege of carrying a card that makes you poorer. Genius, really.

The Reality Check

Here’s the deal: Credit card companies are not in business to give you free stuff. They exist to profit off of your debt, interest, and fees. Their entire rewards system is designed to encourage you to spend more, carry a balance, and keep swiping. And just when you think it can’t get worse, here’s the kicker—using credit cards can actually lower your credit score.

Carrying high balances, even if you pay on time, can raise your credit utilization ratio—a key factor in determining your score. Lenders see high usage as a risk, even if you’re a responsible payer. And if you apply for multiple cards to chase different rewards? Those hard inquiries chip away at your score too. So, while you’re busy “earning” rewards, your credit score is taking a hit, making future loans and interest rates even more expensive. What a deal!

If you actually want to game the system, the only way to do it is by paying off your balance in full every single month and using the rewards like a ruthless corporate executive uses company perks—with no emotional attachment. But let’s be real, most people aren’t doing that. The house always wins.

Final Thought: Your Best “Reward” Is Keeping Your Money

Instead of chasing points, cashback, or flight upgrades, consider this wild idea: Keep your money. Invest it. Save it. Use it to start a business, buy actual assets, or at least splurge on something that won’t require you to carry a balance for eternity.

Because at the end of the day, your credit card company doesn’t actually want to reward you. They want to own you. And that, my friend, is the real game you should be trying to win.