If you don’t plan on paying off your credit card balance in full every month, skip the rewards credit card.
Carrying a balance on a rewards credit card and paying interest can offset or even completely negate the value of your rewards.
For example, if you earn a 2% cash reward on $1,000 in spending, you'll earn $20 in rewards. However, if it takes you four months to pay off the balance at the current average credit card annual percentage rate (APR) of 20.34%, the interest you pay will outweigh the rewards you earned. In this example, if you pay $275 per month, over four months, you’ll pay $41 in interest—negating the reward you earned.
While you may be tempted to charge more than usual to maximize rewards, limiting credit card purchases to what you can afford to pay off each month allows you to actually keep the rewards you earn.
If you’re not going to pay off the balance in full each month, choose a credit card with a low annual percentage rate. Don’t get distracted by offers for cash back or rewards. The amount you will pay in interest charges will exceed the value of the perks.
NE PA members have access to credit cards with low rates that don’t change as the prime rate changes. The NE PA Platinum Visa Card has had a low 8.99% APR since 2006. And the NE PA Classic Visa Card has had a low 11.50% APR since 1994. Plus, both cards offer No Balance Transfer Fee, No Cash Advance Fee, and No Annual Fee. Visit our website to learn more.
