It’s always hard to resist the rewards that are often associated with credit cards. If you earn 1% cash back, wouldn’t it be logical to use your credit card more than other methods of payment?
An article on gulfnews.com points out that financial experts have noticed that “reward schemes are not really worth it because the value of the incentives rarely offsets the amount spent by the cardholder.” When people have the opportunity to save, they lose sight of the goal and actually end up getting in credit card debt.
This isn’t to say every person with a credit card that has a rewards program is putting him or herself into debt. When used carefully, they can be an added bonus.
Many credit card companies rely on rewards programs like cash back to make money. The incentive increases credit card purchases, and keeps many customers in debt. Managing partner at Holborn Assets, Steve Gregory says, “Used unwisely, they create more profit for banks than any of their other retail banking activities.”
Don’t fall victim to cash back programs. The incentive to earn cash back is not worth the debt that it can cause.
For help getting out of debt, contact us today.