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The role of rewards in the rise of credit card debt

Consumers in Nashville may use credit cards for many different reasons. With the number of card offers out there these days, there is certainly no shortage of types of cards to choose from. The average amount of household credit card debt is on the rise, according to CNBC, and has now reached over $1 trillion. Some are now asking whether efforts by credit lenders to lure consumers in with attractive rewards programs are contributing to this increase.

It seems like commercials and ads for credit cards are everywhere, offering everything from cash back to travel perks. Forbes points out that for those who are able to pay off their balances each month, taking advantage of these incentives can be a savvy thing to do. However, someone who is unable to do so and ends up carrying a balance that costs them a lot in interest over time may not actually be getting any benefit. While the average annual percentage rate is 17 percent, some people may end up paying a much higher rate than that.

However, some point out that methods of paying for purchases do trend at different points in time. As recently as a few years ago, debit cards were more popular than credit cards. However, now that credit companies are offering such good rewards and credit is more readily available, credit cards have become more popular.

Therefore, the increase in overall credit card debt may just be a reflection of how people's spending habits have changed and not necessarily indicative of the fact that they are spending more.

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