Depending on your perspective, credit cards might be the epitome of evil, or they can be the best thing that ever happened to you! When used unwisely, they can sink you into deep debt, but if you have some self control and know the tricks, then you can really get a lot out of credit cards. I’m in the latter category where I like to use credit cards for rewards. I don’t spend more than I have in the bank, and I pay it off each month. My rewards just add up over the year and it’s worth it for me.
If you don’t keep track of your expenses and tend to have a lot of impulse purchases, then I wouldn’t be using credit cards if I were you. It’s much too easy to charge something and think that it’ll be okay later. Paying with cash hurts a lot more and will help curb impulses. There’s nothing like seeing a stack of cash disappear! If your finances are in order, you live under your means, and you can curb your impulse buying, then read on!
Pay it all off each month
Rewards credit cards will always have the highest interest rates possible. If you pay only the minimum each month, then that credit card debt will start adding up quickly! Only charge what you can pay off in full each month. Having a balance in there really means that you paid too much for what you charged. I put all my accounts in Mint.com so that I can see the total amount of credit card debt in one place. This really helps me to make sure I don’t charge too much. When in doubt, pay with a debit card, check, or cash.
Racking up rewards
I like the cards with cash rewards or that give you a higher value for gift cards. Using credit cards over a year will get me a few hundred in rewards points. Always make sure to use those rewards! The credit card companies aren’t going to remind you if you don’t!
Using multiple cards to get the most points
I have three rewards credit cards I like to use. Chase Freedom, Discover, and my Costco AmEx card! Chase and Discover have different categories each quarter where you can get 5% back. The AmEx gets 3% on gas, 2% on restaurants and travel, and 1% on everything else. Between the three of these cards, I’m bound to get the most cash back possible!
Set up a reminder system for payments
I don’t trust that the email reminders credit cards companies send you will always work. I did have one scare where one email never came through and I ended up being 2 days late. Since I had never been late before, they waived the fee and didn’t report it. Whoosh. I was pretty relieved. After that though, I set up my own reminder system so it would never happen again.
Check your transactions
I log in a few times a week to check that transactions have gone through and are correct. If you have a dispute, make sure to contact the credit card company as soon as possible so you don’t pay more than you should. This is also a good way to check for fraud. I’ve had fraudulent charges on my Chase card twice but they’ve always taken care of it.
Using credit cards really isn’t for everyone. If you’re not really organized and are forgetful, then it’s probably a bit risky. Unfortunately, it’s like gambling where a much larger proportion of people lose than win. If you’re careful though, you can get a lot out of them!
Are you a fan of credit cards or do you freeze them in ice?