A new survey from NerdWallet found that 21% of Americans have used a credit card to earn rewards despite having credit card debt.
This means those credit card rewards are likely getting canceled out by the interest of carrying a balance each month on your credit card.
The average interest rate on credit cards assessing interest is 23.37%, as of August 2024, according to the Federal Reserve Bank of St. Louis. So, for every $1,000 you’re carrying on your credit card, it’s costing you around $234 a year, NerdWallet said.
The best way to reap the rewards offered by credit cards is by paying off the balance each month, so if you currently have credit card debt you should pause your spending and tackle that first.
If you currently have credit card debt, it’s a good idea to pause spending on cards until it’s paid off. The rewards math very likely won’t work out in your favor anyway, and it’s easier to tackle your debt load if it doesn’t continue to grow.
One tip NerdWallet recommends to avoid running up a balance too high to pay off each month is to not use a credit card for you tend to overspend on such as clothing, hobby supplies or dining out.
Instead, NerdWallet said you should try using cash or debit to keep that budget category in check.
NerdWallet said its survey was conducted online by The Harris Poll in October among 2,090 U.S. adults ages 18 and older.
