3 Ways To Chase Credit Card Rewards Can Backfire

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Going down can be a dangerous road.

Key Point

• Reward points are a big advantage of credit cards.
• If you’re not careful, you could wind up bankrupting your finances in pursuit of these rewards.
• Don’t buy unnecessary things just to get a reward.

One of the best things about using a credit card is that you get rewarded for purchases you’ve already planned. Not surprisingly, do you spend $100 a week at the grocery store? You might be eligible for extra cash back that pocket a few bucks a week.

Credit card rewards are great perks, but it’s important not to chase them too aggressively. Doing so may result in these undesirable consequences.

Credit card rewards are very attractive because they seem to make you money for free. Collecting rewards with subscriptions and subscriptions is great, but one of the pitfalls you can fall into is spending extra money just to get rewards.

Spending too much can ruin your budget and leave you with insufficient money to spend on the bills you need. It can also make it harder to reach your savings goals.

Let’s say you’re trying to save money to buy a house. Spend $200 more here and $300 more there and you’ll have to postpone that milestone by months or longer.

2. There is a possibility that there will remain a balance that cannot be paid off

Overspending in hopes of increasing your credit card rewards can not only keep you from meeting your goals, but can actually drive you into credit card debt. This is not a good thing as credit cards are notorious for charging high interest rates. In fact, credit card interest can be astronomical, so by the time you pay off your $300 balance, you’ll end up spending over $600 on the items you’ve charged.

3. It can hurt your credit score

Swipe your credit card and pay off your balance on time every month without hurting your credit score. If anything, it should help your score. But chasing credit card rewards repeatedly can result in a balance that you can’t pay in full.And it can actually lower your credit score.

One of the factors used to calculate your credit score is your credit usage rate, or the amount of credits you can use at one time. Must not exceed 30% of total available credits. If you have a balance of $500 and your total credit limit is $10,000 across various credit cards, it will not negatively affect your score. But a $5,000 balance might.

Beware of credit card rewards

Getting a credit card is about rewarding you for the purchases you make. But to avoid negative consequences, ask yourself one simple question before swiping that card. please.

If so, put the item in question back on the shelf, or if you’re shopping online, consider the warning to close your browser and move on. If you find yourself overspending all the time, it may be time to stop using credit cards until you can train your brain to think differently.