Rewards Credit Cards Can Keep You In Debt


Did you know that there are more than 170 million credit card holders in the U.S.? The interest rates on the balances held by these credit card holders result in billions of dollars in profits for the companies that issue the cards and multi-million dollar annual salaries for the executives of those companies. Instead of spending your money to help the bank’s bottom line, use your credit cards wisely and save more of your money for your own needs.

Don’t Spend Just To Earn Rewards

Credit card companies keep you connected to shopping by offering you rewards for spending money. The average credit card gives users rewards worth about 2% to 3% cash back on purchases, but the interest rate for using those credit cards hovers around 15%. This means you are spending money for the sake of saving money, which is actually costing you money.

You can easily overcome this cycle by using more cash. When you shop with cash, there are no interest charges added to the purchase, causing the cost to slowly inflate over time. Using cash can help you break your bad spending habits as well. Researchers have studied the emotional effect that cash purchases have on consumers and they have discovered a strong resistance to letting the cash go. Having a good savings plan will ensure you have cash to spend, will keep you out of debt, and keep you from chasing rewards.

Be Aware Of Changing Program Details

One trick credit card companies are really good at is repackaging their credit cards. Because people often fall into the trap of spending for reward programs, credit card companies revamp their programs to fit different niches within your life. Most companies started out having a single reward program for customers. However, now there’s a program for grocery, airline, gas, hotel, and everyday purchases, while the card is still backed by the same company. Some programs rotate between multiple categories from month to month, making it difficult to use your credit card to the best benefit.

It’s really hard to gain the upper hand on most credit card companies because they often change the rules. You have to pay attention to your billing statement when it comes each month. Credit companies often send you details of changes to your account inside the envelope that contains your statement, but this information is missed by most people because they do not read everything that arrives in the envelope. We get so caught up looking at what we owe that we forget sometimes to look beyond to the other bits of information we receive. Make it a point to read over everything that comes inside your statements so you will be aware of any important changes to your card.

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