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Credit Card Optimization: Using Cards Without Getting Burned

Credit cards are simultaneously the most rewarding and most expensive financial tool available. The difference between earning $800/year in rewards and paying $…

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Credit Card Optimization.

Rewards that work for you — or costs that work against you.

Credit cards are simultaneously the most rewarding and most expensive financial tool available. The difference between earning $800/year in rewards and paying $800/year in interest is the same card, used differently.

22%average credit card interest rate in the US — a rate that makes carrying a balance one of the most expensive financial decisions available to consumers

The Situation

The Two Types of Credit Card Users

The credit card industry segments users into two groups: transactors (pay in full monthly, never pay interest, earn rewards) and revolvers (carry balances, pay interest, fund the rewards programs). The rewards on your card are subsidized by revolvers paying 22% interest. Using credit cards profitably requires being a transactor — categorically.

Cards are built for transactors to profit from and revolvers to fund. The decision about which type you are is binary.
— Worthune Decision Framework

You carry a credit card balance from month to month
You've chosen a rewards card based on sign-up bonuses without evaluating whether your spending patterns match the card's reward categories
You're not sure how much you actually earn in rewards annually compared to any fees you're paying

About This FinBook

At 22% average APR, carrying a credit card balance is one of the most expensive financial habits. Learn how to optimize rewards, avoid interest, and use cards strategically.

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