If you have a credit card with a high interest rate, this is the worst mistake you could make.
Nearly 40 percent of cardholders with a rewards credit card carry a balance, according to a new survey from the credit card website CompareCards.com. The website surveyed more than 1,000 people. And of those who don’t pay their bills in full, the average balance they reported having was $2,547.
“Sometimes, rewards credit cards are pretty enticing and it’s easy to get sucked in,” said Thomas Donaldson, a senior credit specialist for CompareCards. “If you end up carrying a balance or making a late payment, you end up getting hurt in the long run.”
Because rewards credit cards often come with high interest rates and sometimes even annual fees, any rewards cardholders earn can be “completely wiped out,” he said. “There’s no point in getting 1.5 percent cash back if you’re paying 19 percent interest.” The average credit-card interest rate is 16.8 percent.
And rewards cards including Chase’s Sapphire Reserve and American Express’s Platinum have annual fees of $450 and $550, respectively — although they also come with generous travel rewards.