Purchase Acceleration
What's "purchase acceleration," you wonder? It's the common practice among credit-card holders of spending more as they get closer to a reward milestone. As described in a U.S. News & World Report article, some credit-card companies encourage purchase acceleration by alerting customers when they're getting close to a "free" airline ticket or other reward. The article noted that people also tend to spend more after receiving a reward.
Matt's View
Do credit-card companies have us figured out, or what? In addition to encouraging people to overspend, the article went on to point out that many reward cards come with annual fees that easily negate the value of their rewards. And of course, paying interest by carrying a balance doesn't help either.
Here's the rocket science for practicing safe charging: Use credit to buy only pre-planned (budgeted!) items and pay the balance in full each month. For those who can stick to such guidelines, there are plenty of no-fee reward cards out there where the rewards really are free.
This article filed in: Credit/Debit Cards
Managing Money by The Book
- "Be joyful in hope, patient in affliction, faithful in prayer." - Romans 12:12
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