Rewards credit cards may not be the best option for everyone when it comes to paying for travel. The government is showing concerns about the potential regulation of rewards credit cards due to multiple problems identified with these payment systems. High-fee, high-interest mileage-earning credit cards could potentially lead to consumer debt and not provide the expected rewards. Alternatives to rewards credit cards include using a debit card, utilizing a no-annual-fee, low-interest-rate credit card, or using money transfer services like Revolut or Wise.
As the future of payment systems for travelers evolves, industry watchers believe that rewards credit cards may become obsolete. Many travelers are transitioning to debit cards or digital payment systems for lower interest rates and smarter purchasing decisions. The government may regulate rewards credit cards soon, either through existing regulatory bodies like the CFPB and DOT or through Congressional action, such as the Credit Card Competition Act.
Overall, rewards credit cards may not be sustainable in the long run, as they often fail to deliver on promises, encourage excessive spending, and ultimately benefit the airlines and credit card companies issuing the points. Finding an alternative to rewards credit cards may be a more financially responsible choice for consumers. For example, the retired chef, Ronald Duben, opted to book a regular ticket to Japan instead of redeeming his miles on a rewards credit card and plans to close the card for good.
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