Consumers with credit card debt should be wary of cash back offers

With credit card use on the decline in recent months, lenders are flooding mailboxes around the country with new offers that aim to increase consumer spending.

Recent research from the Federal Reserve Bank of Chicago, which studied more than 12,000 consumer credit card accounts from an unidentified U.S. bank, found the bank offered more than 50 percent of its costumers a 1 percent cash-back rewards card.

Users who signed up for these rewards cards gained an additional $25 per month; however, the average balance on the account rose by $115, MSNBC reports. This means that a consumer who is enrolled in a cash back rewards program was likely to rack up an addition $90 in credit card debt per month.

“Not only did they increase their spending, but they increased the debt on this specific card,” Sujit Chakravorti, an economist at the Federal Reserve Bank of Chicago, told MSNBC. “A very small financial incentive gets you to make a big change in your payment habits.”

As a result, those who are already struggling with delinquent mortgage payments and other forms of debt would be wise to avoid the temptations these cards offer.