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How Not to Get Into Spending Traps Placed with Reward Cards

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The pattern we follow our desires often create our habits. Very often we defer to our wishes and form the habit of spending money for the things we do not really need. Those who are in retail sector know the tricks of influence on our minds very well. Cash back offers are among these tricks. Most customers will buy the item which is quite unnecessary for them on seeing the offer to get 1% cash back, so stingy our mind is. Though there are people who manage to get benefits from smart cards incentives, it takes time and really very careful consideration of the reward card offers, so most of us are simply tricked with various schemes. The result usual for people addicted to such kind of purchasing is spending more money than you really earn.

The possible unpleasant consequence is also high interest rate charged from your credit card, when you use it, because there are often ties up between the credit cards companies and various brands which add up to the credit card commission if the payment is done with it.

Thus paying great commission you get a small amount of cash back, and besides you are likely to be trapped to become the permanent customer. In spite of the fact that various companies provide plenty of offers to involve you in credit card use, to remain free from any kind of debt is always better. You should be very careful and reasonable trying to get profit from cash back offers. The side effect possible to get in such situation is also a bad credit score you may get failing to pay back the interests on your credit card. Bad credit history will deprive you of the opportunity to get any kind of loan and get rid of your debt fast.

There are several ways you can follow in order to stay away from the debt trap like reward cards, those who issue them count on their consumer psychology to earn profit. The best way to keep your expenses and income in proper balance is to make careful planning of your budget. Make as little purchases with the help of the cards as possible, better to do this only in case you have to pay through automated machines, try to cover your bills immediately, so that you avoid interest rates expenses. Monthly investigation of the credit card statements and their careful analyses will for sure make the general financial situation clear for you and will give you hints on where your expenses can be decreased as well. Pay your attention to your credit score and make records as to your credit cards, thus you will allow you to make the proper balancing in case you find yourself in need of a huge loan. Every time you get into a debt or pay it out, remember that the sooner you get rid of it the better.

Nowadays there are plenty of credit offers for those who have bad credit history as well, but the negative feature of such proposals is interest rates you will get. The card companies are aware that people are likely to use the cards and that is why they offer discounts on many purchases.

The purpose of the reward cards is to make people use them and get into the trap. There are many tricks through which this can be made.

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AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

3 Comments

  1. Rewards cards can definitely lay a trap to get you to spend more than intended. The key is knowing what you’ve already spent and not spending more than your budget simply because you get rewards. Stick to the budget and get the small discount.

    • I just got a card that offers $200 of gift cards after spending your first $500 with the card. I signed up because I have a bill coming for more than that amount anyway, so why not get $200 along the way? I’m looking forward to getting those gift cards. 🙂


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