Rewards cards and the cost of running balances

Many people keep running balances on rewards cards that end up costing them more than the benefits they receive. While it may seem like a financial mistake, there are reasons why people still choose to have reward cards, such as access to credit. The market for reward cards is large and growing globally. However, research shows that there are winners and losers in this market. Sophisticated users benefit from rewards by paying their full balances each month, while less financially savvy individuals make costly mistakes by carrying over balances. As a result, the banks, in general, always come out as the main beneficiaries of reward cards, making money through interest payments and other fees.