Credit cards offer a range of benefits from rewards to insurance, but they come with substantial risks and potential pitfalls. Mismanaging credit card use can lead to debt, hurt credit scores, and other unforeseen consequences. For instance, hoarding cash back rewards seems prudent, yet inflation could diminish their value over time. To counteract this, one might consider depositing these funds into a high-yield savings account or using them promptly as a statement credit. Additionally, engaging in manufactured spending to accrue rewards without actual expenses can initially seem clever but is often unsustainable and frowned upon by issuers, potentially leading to unexpected debts. Lastly, using installment plans on credit cards can help manage large purchases, but often at a cost, such as increased credit utilization impacting credit scores. These tactics, while appealing, require careful consideration to avoid long-term financial drawbacks.
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