Credit Cards

Credit accounts issued by banks.

How banks make money from them:

• A small percentage of each transaction (paid by the merchant) goes to the card network and bank
• High interest rates on carried balances
• Balance transfer fees

Benefits to consumers:

• Points or cash-back reward systems
• Generous fraud protection

In Roo, credit cards live in one of two behaviors:

• Payback Mode — the default for credit cards. Roo automatically sets aside money in the Payback Pouch as you spend, so the cash to pay the statement is ready.
• Off Budget — the card is tracked for net worth only, and you manage its payments yourself.

A credit card is never On Budget — its balance is money you owe, not cash you have. Roo’s recommended approach is to keep every card in Payback Mode and pay it in full each month so you never pay interest — see Credit Card Strategy for the full picture and how to get there from a carried balance.

The bottom line: Credit cards are powerful tools that can help (cash rewards, credit building, fraud protection) or hurt (high-interest debt). If you’re carrying a balance, consider using the Payback Plan to create a prioritized payoff plan. Seek guidance from a financial professional for your specific situation.