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It is obviously important to have a credit card to navigate in today’s society, from purchasing online, to traveling, to many other conveniences. But credit cards have their downside. Don’t believe us? The Federal Reserve has found that Americans are approaching $1 trillion in credit card debt. (1) The numbers don’t lie. Credit card debt is a major problem in America.

The Truth About Paying Off Your Card Each Month

We’ve heard it before: “I can pay off my credit card each month. So, what’s the big deal?”

There’s no positive side to credit card use. Even if you pay the bill on time, you’re not beating the system. The reality is the average family household today carries a balance of $15,654 in credit card debt.

(2) Think about it for a second. When you open a credit card account, you’re likely to pay thousands of dollars in interest over the years as you carry a balance. Even if you promise to pay it off every month, all it takes is one lost or missed payment. If that happens, your interest rate skyrockets, your credit score drops, and you get slapped with fees. With just one mistake, you’ve gotten yourself into a big money mess.

Airline Miles

People love airline miles. This is one of the most common reasons people give for hanging on to their credit cards. Let’s say your card offers airline miles and has an $80 annual fee. Hypothetically, if you spend $8,000 on the card every year and pay it off each month, you’ll have accumulated enough points to get a free plane ticket in three years. The only problem? In those three years, you’ll have spent $240 in annual fees alone—and you can buy a plane ticket outright for that amount!

Cash Back

We like cash around here, but this is one instance we don’t recommend it. You have to spend thousands on a credit card to get a measly $100 cashback. Oh, and it’s probably just a credit applied to your account anyway, not actual cash in your pocket. Plus, it might be just enough to cover your annual fee. How about you keep your cash instead?


Now let’s talk about the rewards. Plenty of people hang on to credit cards for the sole purpose of using the rewards or coupons they get. This is especially true of store credit cards. Sure, you might get free shipping twice a year or a 15% off coupon every other month—but is it really saving you money? Think about it. You’re so excited to save 15% percent that you spend $150 in a shopping frenzy. That 15% you “saved” goes out the window when you tack on interest—especially if you don’t pay off the balance. Your “reward” wasn’t really a reward at all.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida. For more information, go to our web site or call 727-335-7151.