Hey everyone, thanks for joining me for this week’s Friday Finance with Josh! A lot of my reading over the past week has revolved around the possibilities of earning cash with credit cards. I’ve seen the how too’s, the what not to do’s and just about everything in between. But, another thing that I’ve noticed is that most articles make it seem like such a simple process that everyone should be doing it. But, is it really that easy? Should everyone be thinking about applying for the next cash back credit card they see? Could it be that simple? Of course not! This is finances! That being said, today, I’m going to discuss the dangers associated with using cash back credit cards for the sole purpose of earning money…
How Cash Back Credit Cards Can Become Dangerous
The Single Biggest Danger…Turning Credit Cards Into A Game – All of our lives, we learn to be competitive, no matter how much we say, “Win or lose, this is going to be a great time!”, deep down inside, there’s always a part of us that wants to score more points and win the game. This same concept is being thought of in relation to credit cards with both cash back cards and other forms of rewards cards. The simple fact is, so many people get so into the score on their rewards points balance that they forget important things like maintaining control of debt.
Applying For And Using A Bad Cash Back Card – As with any industry, when it comes to the credit card industry, there are good lenders to work with and there are definitely bad lenders that people get stuck with. Why, because many people want to earn money using a credit card so bad, they apply for the first offer they can find. Unfortunately, many of the lenders that do a horrible job of lending do a great job of marketing! With that being said, if you are dead set on using cash back credit cards, compare the market making sure to compare fees, interest and rewards programs before choosing to apply for any offer.
Paying Interest – Although, the concept of earning cash while you are in debt, for being in debt sounds very appealing, it’s not that simple. If you are paying interest rates each and every month, you’re not getting free cash, you’re paying at least 10 times what you earn in interest so, in my opinion, you’re still in the red. That being said, the only way to get out of paying interest on cash back credit cards is to make sure that you always pay your balance off in full within the grace period.
A Final Warning For The Curious Spender
Now, these things don’t seem too dangerous but, they never do. At least, until they cause a financial hardship that spirals into bankruptcy. As with any form of credit card, cash back credit cards have a purpose and fit specific needs well for specific people. However, they are by no means made for everyone. They are designed for only the most financially stable people who have a strong hold on their finances and posses great budgeting skills. If you’re not there yet, they can be the most dangerous plastic rectangle you ever come across!
Thanks For Reading!
As always, I really appreciate you taking the time out of your day to read my articles! If you have any questions, concerns or comments, please feel free to leave a comment below or get in touch on Google+. I look forward to hearing from you!