Credit card rewards are not worth carrying debt

Nearly two-thirds of Americans with debt are making a critical credit card mistake in 2024.

According to a recent study conducted by Bank Rate, 67% of Americans carrying debt balances on their credit cards are still spending with them in hope of earning rewards.

Money expert Clark Howard says the end result of this strategy can be catastrophic for your personal finances.

“Even if you have a credit card that is giving you cash back, points, miles, hotel stays or whatever the ratio is for whatever the prize is at the end of the day — That is fool’s gold because of what you’re paying in interest,” Clark said.

On the surface, rewards credit cards seem great.

They can be a great way to earn travel rewards or cash back on everyday purchases. In fact, Clark carries several, such as the Capital One Venture X Rewards Card and Citi Double Cash Card, in his wallet.

But the key to using these cards successfully is paying the balance in full each and every month.

Even an occasional slip up on this can flip the script and make rewards credit cards a losing proposition.

“It’s not at all unusual for a rewards card to have an interest rate of 25%,” Clark says. “You may be getting a 2% reward on your spending, but you’re not going anywhere. You’re going backward!”

Team Clark often suggests using rewards credit cards in our credit card content. But we do so with the caveat you must pay the balance in full each month to gain any benefit from those credit cards.