Use a Credit Card? It Could Be Costing You Over $900 Per Year
Americans are an estimated $905 billion in credit card debt, according to a study by NerdWallet. This has increased 8% over the last year. The study identified two types of credit card users – ‘transactors’ and ‘revolvers’. The ‘transactors’ use their credit card as simple debit cards, and always pay off their balance in full every month. But, the ‘revolvers’ don’t show nearly as good behaviour. ‘Revolvers’ carry credit card debt from month to month, often paying high-interest fees. Average U.S households with revolving debt have a balance of $6,081 in the red. With an average interest rate of 14.87%, this balance will rack up $904 in interest over the period of a year.
How to Stop Spending $100s on Credit Card Interest
Here are three steps you can take to get in control of your credit card balance:
1. Find Out What You Owe
The first step you need to take towards tackling your credit card debt is to figure out who much you owe and to which companies. A simple way to do this is to sign up for a free service like Credit Sesame. As well as showing your credit score, it’ll show your balance on any unpaid bills, credit cards or loan and if any of your debts are in collections.
2. Choose the Best Rewards Credit Card
Instead of using your credit cards to rack up more debt, change the way you use them to make them work for you. If used responsibly, you can reap the rewards in the form of cash back and cash bonuses. For example, with the Chase Freedom Unlimited card, you’ll earn 1.5% cash back on every purchase you make. Additionally, if you spend more than $500 in the first 3 months of opening your account you’ll be rewarded with a $150 bonus.
According to Credible’s annual rewards calculator, the Chase Freedom Unlimited card could earn you $417 in annual rewards, based on your spending habits.
3. Compare Other Cards
To make the most of your credit card rewards, try out Birch Finance. It’s a platform that analyzes your spending habits and comes up with the best credit card rewards schemes for you. Not only that, you can link your current cards to the platform to find out which one will give you the best rewards at the gas station or the grocery store for example. Birch claims that the average American shopper could be missing out on more than $200 in rewards each year, by simply swiping the wrong credit card at the register.
