The American Credit Debt Dream

My mother always warned by about the dangers of credit cards…high interest rates, spending money you don’t really have with out realizing it, racking up $35 dollar late and over charge fees for a $2 pack of gum, and destroying your credit score before it had the chance to mature.  

But she never warned me about reward points.  

Gone are the days of credit cards with low interest rates, no annual fees and forgiven late payments.  Now is the time for reward credit cards with the simple promise of:  “Spend money, earn points and redeem for cash and cool stuff.”  Reward points are the new quasi face-lift for credit cards to keep consumers charging and spending in hard economic times.

Because, who doesn’t like free stuff?  Especially free stuff just for spending money?

So it was no surprise that recently I, like many consumers, was also roped into signing up for one of these reward credit cards gimmicks.  A reward credit card from Chase named the Chase Freedom card. 

Ah! Freedom, the American dream!

A card complete with the promise to earn one reward point for every $1 spent, an extra ten rewards point for every purchase and the chance to earn more reward points on monthly designated expenses such as gas or plane tickets.

So with the urging of my friendly Chase banker, I started charging away on my new Chase Freedom card.  In two weeks I made six purchases totaling $263, and according to my calculations I should have earned a whopping 323 points.

Wow! What am I going to do with all these points?

Reality check: as I eagerly signed in online to peruse my potential loot I was astounded to learn that my 323 points would earn me…nothing!

In fact my banked reward points totaled zero!  What?  Maybe you only earn points as you pay your bill?  Not that the 323 points I thought I deserved would help me out.

A Kitchen Aid mixer, worth $286 retail, would cost 36,000 points!  A $50 cash-back reward needs 5,000 points and the paperback novel Water for Elephants, retail $7 on Amazon.com, costs 1,400 points!

Need more points?  Don’t worry there is a fix for that!

Extra points can be earned by shopping online at designated stores.  Earn three points for every dollar spent online at Home Depot and 16 points for every dollar spent at Pro Flowers.  If the consumer doesn’t have a desire to shop online at the featured stores then 1,000 points can be easily purchased for $25.

The Federal Reserve Bank reported that 60 percent of US consumers have a rewards credit card, and that the consumer reward points offered is the second most important reason for having a particular credit card.

According to the Consumer Payment Choice’s 2010 survey, over 609.8 million credit cards are held by consumers in the United States, that’s an average of 3.5 credit cards per consumer, and each household has an average of over $15,000 in credit card debt.

College students are no exception to the American Credit Debt Dream, Sallie Mae estimates that college undergraduates have an average $3,173 in credit card debt, and by the time they graduate the college seniors will have each racked up nearly $20,000 in credit card debt.

So where does this leave me with my 3.5 credit cards and empty reward points?  Running for the scissors!  Goodbye Chase Freedom Card!