“It’s not your salary that makes you rich; it’s your spending habits.” –Charles A. Jaffe.
Have a phone bill? Charge it! Need gas for your car? Charge it! Need some groceries for the week? Charge it! Need anything? Well you get the point. You can charge basically everything on a credit card in today’s society. Banks make it easy to live far beyond your means by simply “charging it”. There are a lot of reasons to use or not use a credit card.
Well its true credit cards offer tremendous rewards which we will get into shortly, but first it is best if we decide if using a credit card is best for you before you start using it. The reason being is that credit cards typically have enormously high interest rates that I have seen as low as 8% all the way up to 25% and possibly even higher! That means if you’re not careful you can find yourself spending a lot more money than just $3.50 for that coffee.
So let’s start by discussing some of the benefits of credit cards. Depending on what it is your looking for in a credit card depends on the benefits that they offer. Some offer points back on purchases, others offer airline miles, and some have other perks such as cruises and vacations. Before deciding your perks determine if you should get a credit card. Do this by being completely honest with yourself about your spending habits. If you think that having a credit card will just allow you to spend, spend, spend, and pay later then a credit card is not for you. Second I suggest starting a monthly budget to determine how much money you have coming in, as well as, going out, to include where it is going. This will help you in your decision of getting a credit card.
Next determine what you want to get out of your credit cards. Then, learn about different credit cards that offer what you are looking for. A simple internet search should do the trick. Compare things like interest rates, rewards, and annual fees. (There are many credit cards without annual fees, these are the ones I prefer.)
After you’ve created your budget and done your research on which card is best for you, all you have to do is apply for it. Once you apply, the card company will decide whether they deem you trustworthy enough to have a card and they will accept or decline your application. Now some credit card companies offer credit cards with high dollar amounts that can be put on them. If you do not feel confident in the fact that you will not max them out, DO NOT ALLOW THE HIGH AMOUNT! Call the card company and ask that your dollar limit be lowered to something much lower and thus preventing you from overspending. This will save you from owing too much money at a high interest rate and save your credit! However, if you can control your spending then it might be fine; but still be cautious with your spending habits.
So what’s the secret? These all sound like bad things… Well the secret is that if you pay your credit card off within one billing cycle they typically do not accrue interest! (Check your specific card) This means that you are essentially using the banks money for free. It allows your money to grow in a bank account (I know most barely gain a few cents). Most importantly, is that you get rewards or points. These points or rewards can be redeemed for a large variety of things. (Depending on your card). They are also free to use at almost any time. (Again do your research and check your card for details). But be careful; just because you are getting points or rewards doesn’t mean that you do not have to pay back every dollar that you spent previously to obtain them.
Now let me tell you why I love credit cards. I love my credit cards because they give these points. I use my credit card for any and everything that I am ALREADY BUYING. Things such as groceries, gas, phone bill, car insurance, oil changes, and a few others. The key here is making sure that the items you are purchasing fall within your monthly budget. As long as they fall within your monthly budget you will have absolutely no problems paying off your credit card when the statement is due! This means you do not pay interest (check your card for details) and that you are getting points! It’s a win-win. In fact I am using my credit card rewards that I have acquired from the year to pay for my next vacation.
Now I realize that having a credit card isn’t for everyone. Some people need to work on controlling their spending habits. Others have much more debt to worry about. As with anything, there is a right way to use them and wrong way to use them. I am not an expert on the subject nor do I have any stake in if you use any specific card or not. I simply found the benefits of using my credit card quickly and wanted to share my experience with you. What ways do you use a credit card let me know below! And don’t forget to subscribe!
James A. Lovejoy