A listener recently sent us this dilemma:
“I use my credit card for everyday spending, always pay it off in full each month, and keep it open for credit score purposes. I’ve been tempted by the points and perks, but is it actually a good idea or am I better off avoiding credit cards altogether?”
It’s a great question, especially with all the ads pushing travel rewards, cashback, and shiny perks. But here’s the truth: the “points game” isn’t as easy to win as it looks.
What are the risks of credit cards?
- Average credit card purchase APR in the UK is through the roof, roughly 35.7% APR as of mid 2025.
- Cards that offer rewards (points, frequent flyer miles etc.) tend to have higher APRs than “vanilla” cards.
- Although many people think they’re “safe” by paying off the full balance each month, fewer than half of credit card users actually do so regularly.
- Average balances are rising. According to a recent FICO UK report, the average credit card balance per user is around £1,845 as of March 2025.
Even if you use credit responsibly, paying on time and keeping your balance low, a lot of people don’t. Credit companies design their fees and rewards assuming some balances will carry over, which is why perks can be tempting and fees can feel high.
Do people spend more when using credit instead of their own money?
Yes. Research shows people often spend more when using credit than when spending money they already have. Some reasons:
- It feels less “real” to spend borrowed money, so you might buy things more impulsively.
- Credit detaches you from the immediate impact of spending – you see the bill later, not right now.
- Rewards or perks can make it feel justified to spend more (e.g., “I’ll get points, so it’s okay”).
Even if you’re paying the balance in full, this “invisible money” effect can make your spending creep up without you noticing.
When “points + paying in full” might work
You might be among the rare people who can make it worth it if:
- You always pay off the full statement balance before interest kicks in. No exceptions.
- You track every spend meticulously and stay organised.
- You avoid letting perks tempt you into spending on non essentials just for bonus points.
- The fees / interest rates on the card are reasonable compared to the rewards you actually use. Sometimes, the cost of the card + higher APR outweighs the value of the perks.
If all that’s true, these cards can work as a tool, not a trap.
Alternatives to collecting points via credit
If you like the idea of rewards but want to stay safer, here are lower-risk options:
- Cashback debit cards that don’t require you carrying credit debt.
- Use the Financielle budget tracker to see what you actually benefit vs what you spend just because the offers exist.
- Focus on building your emergency fund & paying down any debts first as the benefit of being debt free tends to outweigh the nice-to-haves.
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