Credit card rewards can be profitable for users who manage their finances effectively. In 2022, while credit card issuers paid out over $40 billion in rewards, they collected more than $130 billion in fees and interest. The Consumer Financial Protection Bureau (CFPB) categorizes cardholders into revolvers and transactors. Revolvers carry balances and pay high interest, making up 94% of the fees paid but only earning 27% of the rewards. Transactors, who pay their balances in full each month, earn 73% of the rewards while paying just 6% of the fees. The key to profiting from credit card rewards is to avoid carrying a balance and paying interest, thus maximizing rewards earned versus costs.
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