That man is the richest whose pleasures are the cheapest. - Henry David Thoreau
Question #87333 posted on 07/15/2016 12:08 a.m.
Q:

Dear 100 Hour Board,

So Amazon keeps telling me that I can get a $50 amazon gift card (it used to say $80 and it switched...??) if I get the Amazon.com rewards visa. My question is, if I get it and never use it, will I basically get a free $50 gift card? If I don't use the card I don't have to worry about missing a payment and getting interest, right? I feel like I'm missing something; it can't be that simple. What am I missing?

Thanks

A:

Dear Thankful,

I read the fine print for you to find out. Turns out you're not missing anything. It's as simple as it sounds. The reason they can do this is that enough people carry enough of a balance that they make way more money than they give out. The interest rate on that card varies from 18% to 24% based on creditworthiness, so it doesn't take much of a carried balance to add up pretty quickly. They also charge fees for cash advances and late payments. 

And now a cautionary tale. Mrs. The Skipper and I have a few credit cards, and for a while we used one as a debit card, never spending more than we had and paying off the balance each month, and kept one for an emergency. As is wont to happen in life, things came up both urgent and trivial that required a little more money than we had, and our balance slowly crept upwards. Finally, one month the transmission on our car died unexpectedly and we were forced to use the rest of our available credit to pay for the repair. Despite our budgeting and good intentions, we had dug ourselves into a hole of debt that's taken a lot of work to dig out of. We had the exact same plan as you to either not use cards, or to pay them off each month. But it is ridiculously easy to not do that even for fairly legitimate things, so just be careful if that's what you end up doing.

Best financial wishes for you and yours,
The Skipper