KNOXVILLE, Tenn. (WATE) – Many people have credit cards that offer rewards for your purchases, but US News and World Report Survey of 1,500 rewards credit cardholders shows more than half pass up free money every time they swipe.
WATE Six On Your Side Consumer Reporter Don Dare explains some of the mistakes you can make when it comes to rewards credit cards.
Must Shop Around
Nearly half of those who hold rewards credit cards didn’t research their card before signing up for it, according to a US News survey.
More than half of survey respondents said they don’t regularly shop around to see if there’s a better card available than the one they currently have.
Further, most of these folks apparently never corrected this costly misstep.
Find Best Card
It’s possible if not likely that these folks could be earning more rewards with another card.
It’s also possible they could have more useful rewards with another card.
If you don’t take a minute to comparison shop, you can’t be certain that you are using the most rewarding and otherwise best credit card for you.
The survey found that 26% of rewards credit cardholders carry a balance over from one month to the next at least seven times a year.
This breaks rule number one of rewards cards; avoid them if you will be carrying a balance.
Rewards cards tend to have higher interest rates.
So, carrying a balance stands to cost you more in interest than you would earn in rewards.
If you carry a credit card balance, you should be working to get out of debt as fast as possible. That means not using a credit card at all, or at least making sure you pay as little interest as possible.
To pay the smallest amount of interest requires shopping around to find the credit card with the lowest possible annual percentage rate, or APR, for which you can qualify.
Most people wouldn’t buy a home without first shopping around for the best mortgage, which can cost you thousands of dollars over the life of the loan.
It’s basically the same with credit cards; if you don’t maximize your rewards or minimize your interest payments, you will lose money every time you swipe.