1 in 4 Americans made this money move this year, and it has Suze Orman “worried” — but for some of you, it’s actually a lucrative move

Finance guru Suze Orman isn’t shy about sharing her distaste for credit cards. In a blog post earlier this year, she wrote that more than a quarter of Americans surveyed said they had applied for a new credit card in the past 12 months, and that statistic made her very worried. “Using cash or a debit card is my preferred way to cover the majority of your everyday spending. When you know your spending will be limited to the cash you have in your wallet or in your checking account, you will likely curtail unnecessary spending,” says Orman. 

She certainly has a point. But pros say those of you who know you can always pay off your credit card balance in full and on time could likely financially benefit — potentially to the tune of thousands of dollars — from a credit card that offers high rewards. (If you’re in that category, you can see some of the best cash-back credit cards of December 2022 here.)

In a typical year, Ted Rossman, senior industry analyst at CreditCards.com says he earns between $1,500 and $2,000 in cash back from his credit cards without paying a cent in interest. My editor – who is rabid about always paying her bill in full and on time – notes that she’s a fan of credit cards for the same reason. “I know many people who have taken amazing trips all over the world for free or very close to it because of credit card rewards,” says Rossman. 

Adds Matt Schulz, chief credit analyst at LendingTree: “The right credit card, used wisely, can actually be an incredibly useful tool … It can give you free airplane flights and hotel rooms and it can put cash back in your pocket for things that you buy.” Adds Senitra Horbrook, credit cards editor at The Points Guy, “Using credit cards wisely can help you build a high credit score, which means you can receive lower interest rates on a mortgage or car loan.” (See some of the best cash-back credit cards of December 2022 here.)

Still, we must again caution: If you have credit card debt, forget about rewards and instead prioritize your interest rate. It may be helpful, Rossman says, to think of credit cards like power tools: “They can be really useful, but they can also be dangerous. That said, I think experts like Suze Orman and Dave Ramsey go too far in their criticism of credit cards,” says Rossman. 

Indeed, credit cards can be dangerous for a variety of reasons — but the benefits can also outweigh the risks. “They can make it way too easy for you to spend yourself into debt that you may have to spend years digging yourself out of. If you’re even just 30 days late with a payment, it can do serious damage to your credit. That’s why I always say that if you don’t want to get a credit card, don’t get one,” says Schulz. 

Responsible spending means not charging more than you can pay back when the bill is due. “If you have debt, the higher interest charges on rewards cards are typically not worth the card benefits received,” says Horbrook. Or as Schulz puts it: “If you carry a balance, your focus should be on paying that balance down with a 0% balance transfer credit card or even a personal loan rather than chasing rewards. You don’t have to be an accountant to understand that paying 22% in interest on a purchase in order to get 2% cash back is a bad deal,” says Schulz.

While it’s not that credit cards are bad, you just need to think about how any particular card fits into your overall financial picture. “Before you fill out any card applications, ask yourself a few questions: What kinds of cards are you most likely to qualify for considering your credit score, income and other financial information? How would you use any rewards you’d earn? Do you feel comfortable managing more than one credit card at a time? Is an annual fee a dealbreaker for you?,” says Sara Rathner, credit card expert at NerdWallet.

At the end of the day, if a card doesn’t meet your needs, it’s not the right card for you. “That might mean it earns rewards in places you don’t actually spend a lot of money or it charges high fees in exchange for premium travel benefits, which are useless if you don’t travel often. Consider the cost of carrying a card compared to the value of any rewards and other perks you’d get as a cardholder,” says Rathner.