The Downside of Credit Card Rewards

The Downside of Credit Card Rewards
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Anne Johnson
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The three types of credit card rewards are cash back, points, and miles. All seem attractive when you’re deciding on a credit card. The concept is simple: You charge for goods, and the result is a reward from the credit card.

But are you really being rewarded? There’s a secret that credit card companies don’t tell you that could cost you more than the rewards are worth. Here is the downside of credit card rewards.

Reward Credit Cards Can Cost

Credit cards allow you to have revolving debt. Revolving debt will enable you to withdraw from, repay, and then withdraw from again. There are three types of revolving debt:
  • heavy revolvers, which carry balances over to the next month continually
  • light revolvers, which sometimes carry a balance over to the next month
  • transactors, which never carry balances over to the next month
According to the Federal Reserve, the total U.S. consumer debt for heavy revolvers, as of December 2023, is $1.31 trillion. By the end of 2023, 49 percent of Americans became debt revolvers. This was up from 39 percent in 2021.
Anne Johnson
Anne Johnson
Author
Anne Johnson was a commercial property & casualty insurance agent for nine years. She was also licensed in health and life insurance. Anne went on to own an advertising agency where she worked with businesses. She has been writing about personal finance for ten years.
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