Jesse Jones

Jesse Jones: 67% of credit card users are chasing rewards

With credit card debt surpassing $1 trillion a new study says too many are chasing credit card rewards instead of paying down their debt.

Of those carrying a balance, 67% are chasing credit card rewards or companion plane tickets - instead of 0% interest balance transfers, and that is a big mistake.

Ted Rossman from says using that math could keep folks underwater and in debt for years.

“That’s a big mistake, because the average credit card charges a record high 20.75%, and the typical rewards payout is often just 1%- 2% in cash back or an equivalent amount of airline miles. It doesn’t make sense to pay 20% interest just to get 1% or 2% in rewards if you have debt with the interest rate first,” Rossman said.

The Bankrate study also says 56% of credit card holders pay in full every month, so chasing rewards is great for them. But for the other 44% not so much.

“People get into credit card debt for very practical reasons, but it becomes a tough cycle to break, and it’s so much harder when you’re paying 20% -25% or even 30% in interest. My advice if you have credit card debt, forget about rewards. Get a 0% balance transfer card. Examples include the Wells Fargo Reflect, the City Simplicity and the U.S. Bank Visa Platinum,” Rossman said.

Now none of those credit cards offer rewards, but they do offer 21 months with no interest on a balance transfer. So, you can work on getting your debt in check.

The average balance is over $6,000, according to TransUnion. And, you know, minimum payments can keep you in debt for decades. The minimum payment math is really depressing. So, I think it’s so important to prioritize that interest rate. There are things you can do to bring it down, like a 0% balance transfer, but you’ve really got to face that and tackle it head on,” Rossman said.

The bottom line is to keep your eyes on the prize. Finding ways to eliminate paying high-interest rates will keep more money in your pocket than chasing rewards for cheap plane tickets to take you on an expensive vacation.

Comments on this article