In the world of personal finance there appears to be two different mindsets when it comes to the use of credit cards. They’re either going to ruin your life with irreparable debt or they’ll reward you with hundreds of dollars worth of airline miles, cash back or points that can be redeemed for cool free stuff. I agree there are two sides to the coin but with good discipline, and a few simple rules, you can always have it land on heads.
#1. Never buy something with a credit card that you don’t already have the means to pay for.
(planning to pay the card off when you get your next paycheck doesn’t count.)
#2. Treat your credit card like it’s cash.
(meaning every time you swipe it money is draining from your checking account.)
-I know that years ago, before I had a credit card, it was very difficult for me to spend hard earned cash. I always preferred to keep it and watch it grow. Treat credit cards the same way. If you’re tight with your money then be tight with your credit card. If you’re willy nilly with your money then you probably shouldn’t have one in the first place.
#3. Never carry a balance from month to month or make minimum payments.
(sometimes I pay off my card the same day I use it.)
#4. Read the fine print.
(balance transfer fees, intro APR vs regular APR, stipulations redeeming points etc. etc.)
-Credit card companies want to pass out as many cards to as many people as possible hoping that eventually we will slip up and get stuck paying their fees. Normally, paying everything off a few times a month will eliminate your chances of being charged anything BUT there can be red tape when it comes to redeeming points. Also make sure you are aware of any annual fees to use the card. Know what you’re signing up for and planning on keeping it a while because ditching a card you don’t like after a year can ding your credit score.
#5. Shop around.
(there are LOTS of credit cards out there and they are all competing for your business/bank account.)
-Bankrate.com is a great resource for comparing the most current credit card offers. They even put them into categories to help you find what you’re looking for more easily.
At the end of the day, I think everybody should be taking advantage of what the credit cards companies are offering us. I know paying for things with cash feels good, but throwing away money doesn’t. That’s exactly what you’re doing by not using a rewards card of some sort.