In a world where many banks and personal finance websites make a lot of money on credit card signups, we’re constantly besieged with offers to upgrade our current card with something newer, flashier, and most likely, with better rewards.
Maximizing credit card rewards can make sense. If you’re somebody who charges thousands of dollars in work or business expenses through a credit card each month, there’s a case to be made for switching providers.
Say you spend $2,000 per month on your card, or $24,000 per year. An upgrade from a 0.5% to 2% rewards card will put an additional $360 in your wallet. That more than makes up for any annual fee.
But most of us don’t spend that much on our cards. The average family has four major expenses -- shelter, car payments, utilities, and food. Food is easy to put on a credit card. So are some utility payments. But it’s nearly impossible to pay your rent using a credit card, and only some car expenses can be paid with a credit card.
The average family only puts a few hundred dollars per month on their credit card. In that case, the rewards don’t add up fast enough to justify getting excited about a new card.
And then there’s the issue of spending. Studies have shown people spend more using credit cards than they do cash. It feels like they’re not spending at all. That’s another reason why credit cards can be problematic.
The bottom line? There are better things to worry about.
