Earned costless credit card rewards,interest-free, spanning over a decade
In the financial landscape of modern America, a significant number of cardholders find themselves carrying a balance from month to month. According to Bankrate's 2025 Credit Card Debt Survey, nearly half of American cardholders find themselves in this position.
However, chasing credit card rewards while carrying card debt does not make financial sense due to the high interest rates that can quickly erode any benefits gained from rewards. To avoid this, it is crucial to stick to a monthly spending plan and ensure sufficient funds are available to pay off the credit card balance.
Tracking spending throughout the month is essential for adhering to the plan. This can be achieved by using a budgeting app or spending tracker, which can help keep track of spending and provide valuable insights into spending habits. Some budgeting apps even allow for multiple users, making it easier to stay on the same page about spending with a partner.
To maximize credit card rewards, it is essential to pay the statement balance in full each month to avoid paying interest. However, in some cases, low-interest credit cards or 0 percent APR credit cards can be considered if a balance needs to be carried. It is important to note that, in early 2023, the average credit card interest rate was above 20%.
In addition to managing spending and paying off balances, having an emergency fund is crucial for avoiding credit card debt. This fund should be enough to cover expenses in case of job loss, loss of income, or unexpected expenses. Keeping an emergency fund in a high-yield savings account can help the money grow over time.
It is not recommended to pursue rewards credit cards if one cannot pay the balance in full each month. Doing so can lead to a vicious cycle of debt and interest payments that can be challenging to escape.
In contrast, paying off credit card balances frequently can help individuals "get ahead" with rewards without paying for the privilege. This practice forces individuals to feel the weight of their spending more often, which can help them stick to their budget and keep credit utilization ratios low.
An exception can be made for cards with introductory APR for a limited time. However, it is important to remember that, as of 2023, none of the credit card companies mentioned offer a 0-percent interest start bonus lasting longer than one year. Typical interest-free periods last up to around 44 days, and welcome bonuses are usually one-time fixed amounts rather than extended interest-free periods.
Credit cards typically offer a grace period between the end of a billing cycle and when a payment is due, as required by federal law to last at least 21 days. This grace period can provide a valuable window for paying off balances before interest accrues.
In conclusion, managing credit card debt and maximizing rewards requires a combination of careful budgeting, regular payments, and a well-funded emergency fund. By following these practices, American cardholders can navigate the financial landscape with confidence and reap the benefits of their credit card usage.
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