A bit off-topic but pithy copy-pasta of one of my posts on /r/personalfinance
Borrow
The name of the game is "borrow". This game is played between the consumer (you) and the banks (a.k.a. credit card industry).
Objective: By using cards to borrow money, consumers attempt to gain more value (cash-back, rewards points, credit score) than they lose (interest).
Gameplay: Consumers may borrow dollars from banks using various cards over the course of a "round" - a round is almost always one month. You are required to pay this borrowed amount back to the bank over subsequent rounds, otherwise, you lose by disqualification (bankruptcy).
Rule 1: You may borrow a certain amount per card you hold. Each card has a different borrowing (credit) limit.
Rule 2: You get rewarded / penalized based on how you borrow and pay-back:
2a: Rewards: most cards reward 1-2% per dollar borrowed. Certain combinations of "bonus" cards and dollars (spent on restaurants, groceries) reward 3-5%. Across all cards, if you borrow a "healthy" amount, like 10-15% of your total limit, banks will roll the dice and there is a chance you will get a "credit score" bump. You can also get "streak" credit score bonus by never missing payments (at least pay the "minimum" amount each round).
2b: Penalties: all cards have a DUE-DATE grace period (if you pay the balance in full by the due date, you are not penalized at all). After that, most cards carry a late-payment penalty (a.k.a. "finance charge") between 15-25% per dollar borrowed, per year.
Rule 3: You may put as many cards into play as your credit score allows. (Consumers always start with enough credit score to open at least one card.) Cards played too closely together will reduce your credit score. Credit score is also reduced by consumer "dice rolls" such as late utility payments and taking mortgages.
You can calculate how much you are winning by looking at your rewards and credit score. You'll know when you are losing (it feels like suck to pay late fees). The game ends when you don't use credit anymore (so, basically, the game never ends.)
A bit off-topic but pithy copy-pasta of one of my posts on /r/personalfinance
Borrow
The name of the game is "borrow". This game is played between the consumer (you) and the banks (a.k.a. credit card industry).
Objective: By using cards to borrow money, consumers attempt to gain more value (cash-back, rewards points, credit score) than they lose (interest).
Gameplay: Consumers may borrow dollars from banks using various cards over the course of a "round" - a round is almost always one month. You are required to pay this borrowed amount back to the bank over subsequent rounds, otherwise, you lose by disqualification (bankruptcy).
Rule 1: You may borrow a certain amount per card you hold. Each card has a different borrowing (credit) limit.
Rule 2: You get rewarded / penalized based on how you borrow and pay-back:
2a: Rewards: most cards reward 1-2% per dollar borrowed. Certain combinations of "bonus" cards and dollars (spent on restaurants, groceries) reward 3-5%. Across all cards, if you borrow a "healthy" amount, like 10-15% of your total limit, banks will roll the dice and there is a chance you will get a "credit score" bump. You can also get "streak" credit score bonus by never missing payments (at least pay the "minimum" amount each round).
2b: Penalties: all cards have a DUE-DATE grace period (if you pay the balance in full by the due date, you are not penalized at all). After that, most cards carry a late-payment penalty (a.k.a. "finance charge") between 15-25% per dollar borrowed, per year.
Rule 3: You may put as many cards into play as your credit score allows. (Consumers always start with enough credit score to open at least one card.) Cards played too closely together will reduce your credit score. Credit score is also reduced by consumer "dice rolls" such as late utility payments and taking mortgages.
You can calculate how much you are winning by looking at your rewards and credit score. You'll know when you are losing (it feels like suck to pay late fees). The game ends when you don't use credit anymore (so, basically, the game never ends.)