Most US credit card holders make this mistake with their balance
More than half of Americans with credit card debt are making one big mistake, according to a new survey.
Bankrate found that 68 percent of Americans with credit card debt are trying to maximize their credit card rewards, with 27 percent saying they make “every effort” and 41 percent who make “some effort.”
In fact, the generation most guilty of the practice is millennials. Of those with credit card debt, 78 percent try to maximize their rewards, according to the results of the survey, which were published Tuesday.
“This is a bad idea – if you carry credit card debt from month to month (and most cardholders do), you need to forget about rewards and prioritize your interest rate,” Bankrate.com credit card analyst Ted Rossman said.
“The current national average credit card rate is 17.82 percent. It doesn’t make sense to chase 1, 2 or 3 percent in cashback or airline miles if you’re paying roughly 18 percent in interest. Forget about rewards until you’re debt-free,” he added.
One way to help improve debt is to get a balance transfer card, according to Rossman. A balance transfer card can offer 0 percent interest for as long as 21 months, which can help people save hundreds or thousands of dollars, according to Bankrate.
However, according to the survey, only 47 percent of people with credit card debt have applied for one.
For people with credit card debt who haven’t applied for a balance transfer card, 16 percent of people surveyed hadn’t heard of a balance transfer card.
Meanwhile, 32 percent said they hadn’t applied for one because they didn’t think it would help them lower their debt, while 18 percent thought they wouldn’t be approved.
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However, a balance transfer card typically requires only a credit score of 670. Among those surveyed by Bankrate who had applied for a balance transfer card, 81 percent were approved.