The Negative Side of Credit Card You Have To Know

Some people do not like credit cards because they do not like to borrow money.

Some don’t like debt.

The others don’t like overspending.

And don’t like trouble.

how to maximize the credit card cash back
how to maximize the credit card cash back

1. Overspending is very dangerous

If you borrow money to buy liabilities, stop.

If you don’t have money to spend, stop using credit cards.

Overspending is perhaps the most dangerous trap you can fall into.

According to studies, most consumers [su_highlight]spend more[/su_highlight] on a reward credit card than on a non-reward card.

Even if you pay off your balance in full each month, spending more on a reward card than you can afford will quickly land you in financial trouble.

Another reason you may be tempted to overspend is that reward cards can be very addictive.

credit card basics
credit card basics

2. Reward Traps: Don’t Spend a Dollar to Make 4 cents

The more you spend, the greater the rebate.

Keep an eye out for this, especially if your credit card company tries to trick you.

Show me the cash!

Credit card rebates encourage you to spend more money through what economists call “consumer buying momentum.”

Issuers are also aware that after receiving a reward, buyers tend to spend more.

If you receive a free flight ticket as a reward, you are more likely to spend more money on the tour itself (hotel room, meals, souvenirs, and so on).

avoid overspending
avoid overspending

3. Consumer Debt is Reality

Consumer debt is a reality for many Americans.

As a result, it is more important than ever for every consumer to be knowledgeable about his or her credit habits and borrowing capacity.

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Improving your credit score is one way to save a lot of money because it is directly related to how much you pay for credit.

For example, people with excellent credit (above 700) can save tens of thousands of dollars over the course of a 30-year mortgage more than those with only fair credit.

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