Generally speaking, if you’re using your credit card regularly, you’re in one of three camps:
- you fear fraud on a debit card
- you like to earn as many rewards as possible
- or you simply don’t have the money in your bank account to make the purchases you’re making.
Debit Card Fraud
If you’re in the camp of fearing for fraud on your debit card, rest a little easier knowing that according to a Pulse Study, “An estimated 80 percent of U.S. debit cards had been converted to chip cards in 2016, which has resulted in a 28 percent decline in fraud loss rates in 2016 compared to 2015.” It’s only gotten better in the last year and a half, as EVP chips have greatly reduced the risk you take using a debit card. The article also notes that the majority of those fraudulent purchases came after the use of a non-bank ATM (gas stations, convenience stores, etc.). Essentially, don’t use the grungy ATM at your gas station, and your risk of fraud is lessoned greatly.
Rackin’ up Rewards
As for the second camp, earning rewards is where the majority of America sees value in credit cards. Americans love their rewards. And we should! Why pay straight cash on a debit card for something when you could be earning rewards points with a credit card? Makes total sense, right? For those who are religious about paying off their credit card each month, yes, this makes total sense... Especially when you’re using Pei and getting double rewards!
For the rest of us moguls, we’re paying annual fees up to hundreds of dollars, and risking interest rates of 20%+ in order to get 1% cash back, or one additional frequent flyer mile.
Make no mistake about it, you’re paying for your rewards.
Branded cards are even worse. According to Nerd Wallet, “The Starbucks card …. has a $49 fee, and to get the Amazon Prime Rewards Visa, you have to be a Prime member, which now costs $119 a year.” To really hammer in this idea, you also tend to spend more when you have a branded card. The article also highlights Andrea Woroch, a writer and TV personality who specializes in consumer savings, who said, “I kept getting rewards toward Gap, so I would get clothes. It got me in the habit of buying things I didn’t need.”
CNBC’s article “What could go wrong on your quest for credit card points” mentions that “30 percent of young adults offer to pick up the tab because they’re in pursuit of credit card miles and perks, according to a survey from CreditCards.com. 44 percent say they weren’t paid back on at least one occasion.”
We have to ask, what are we doing to ourselves here? What are we risking for our rewards?
Using your credit card as a reserve bank account
Lastly, if you’re in the camp where you’re using your credit card because you don’t have the money in your bank account, be very careful, or better yet, don’t do it.
It happens, but either way, get on Pei and do some double-dipping to get extra cash back on your existing credit card to help pay off that balance!
So, what’s Pei’s suggestion?
Spend as you would, and save as you should. Pei gets you cash back rewards on any of your existing cards, with rewards on the things you need (groceries, household goods, gas (coming soon!), COFFEE, etc.), not just travel and more clothes.
We want to give everyday rewards, so you can spend normally without being incentivized to spend frivolously. We are proud of the fact that we are able to do this without any annual fees, without any additional cards, and without any interest.
Pei is here to help guide you through rewards options. We aren’t saying you should use a debit card, or that you should never touch your credit card again. Simply do the homework, and know your spending habits. What we hope to provide is an additional option to receive rewards without making yourself rack up $1,000s in debt in your pursuit. As always, feel free to reach out via email at support@youpei.me or tweet your questions to @get_pei.
