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Rewards Credit Cards
Rewards credit cards usually offer a cash back reward. Often you can get 1% to 3% of your purchase as a cash reward. This is a tremendous incentive to use your rewards credit card.
Why do credit card companies do this?
Basically for two reasons. First, merchants who accept credit card payments pay a fee to accept credit cards as "payment". Often that fee amounts to 4% or 5% of the purchase amount. So, credit card companies can well afford to give some of that fee to you.
But, the second reason is more important for the credit card companies. Many people buy more than they can afford. So they don't pay off their credit card bill each month. They have a continuing balance from month to month.
Credit card companies love this because they can collect huge amounts of interest. The average person who maintains a credit card balance has nearly $7,000 in their unpaid balance. The monthly fee for having this balance is normally over $100.
So, you can easily see that a person who gets a cash back of $20 or $30 for their monthly credit card purchases is still paying a lot of money for that privilege.
And that make the credit card companies very happy.
So, if you are going to get a rewards credit card, it makes sense to use it for purchases you can pay off every month. That not only saves you money on your purchases, but keeps you from paying high interest rates for revolving credit.
Rewards Credit Cards resources for you to consider
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