Ramit Sethi argues that credit card rewards are a psychological trick. You need to spend $50,000 to earn a $250 flight, and the average APR is 22%. The emotional cost of tracking rewards and paying interest far outweighs any cash-back benefit.
If you make $150,000, the thousand dollars in rewards is not changing your life whatsoever. And the mental calories you're spending to play the game and maximize is not worth your time. You got to spend fifty thousand dollars in order to get your two hundred fifty dollar flight. But you don't even know that because what do they give you? Points and miles. What is 100,000 miles? We don't know anymore. The credit card companies want to confuse us. The average credit card interest rate now is 22% APR, but we're doing all this in hopes of getting 2% cash back. What they tell me is, well, I'm not spending any differently than if it was my own money. I'm like, you want to bet? Go hand over 1000, doll your own money and see the emotional pain it causes. When it hurts less, it costs more.
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