Study Reveals Many Americans Sacrifice Credit Card Rewards Due to Debt

Many people in America are earning points or rewards with their credit cards even though they owe money on those same cards. A recent study by NerdWallet shows that about 1 in 5 Americans are in this situation.

The problem is that the benefits they earn from their cards are often wiped out by the high interest they have to pay for not clearing their card debt. 

If a credit card's interest rate is 23.37% (which was the average in August 2024 according to the Federal Reserve Bank of St. Louis), someone with $1,000 of debt would end up paying an extra $234 over a year.

To make the most out of credit cards and their rewards, you should try to pay off your debt every month. This prevents you from losing money to interest. 

Experts suggest that if you currently owe money on your card, stop using it until you have paid off the debt. Otherwise, the rewards won't make up for the extra costs, and your debt will keep growing.

A helpful tip to avoid a big credit card bill is not to use the card for things you often spend too much on, like clothes, hobbies, or eating out. Instead, it's better to use cash or a debit card, which can help you spend less.

Dig deeper: Credit Cards and Food Delivery: Simplifying Reward Rates

The information in this article is based on an online survey done by The Harris Poll in October, which included 2,090 American adults.

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