Since it binds, you will definitely wear your chain out quicker. If it doesn't spin freely, you are losing a fair amount of power to the drive train. Track racers actually keep their chain pretty loose to minimize friction loss, but street riders need a tighter drivetrain to minimize slop when backpedling.
You can file down you wheel or your frame a little to give yourself more room for adjustment (its not that hard, I’ve done it). Or, you can find the tight spot on your chainring and reset your chainring so the highspot is not so tight. For me, filing down the frame/wheel is a bit easier. I took the wheel route as described on the Sheldon Brown website.
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