Getting the most out of your credit card
Don't be an idiot when it comes to credit cards
Credit Cards as a Tool
Credit cards are incredibly useful tools in today’s market. No longer is it about being able to finance a purchase or buy something now that you can’t afford until tomorrow, its about rewards. There are many cards out there today that provide holders with some sort of rewards incentives. Whether it be frequent flier miles, a points system usable for purchasing items in a catalog, or cash rewards, if you are a card holder it is worth your time and effort to research these. Over time, and through proper use you can make serious gains.
If you can’t afford it, don’t buy it!
That is the golden rule for credit card use. I’m guilty of doing it and I’m assuming you are too. By carrying over purchases from one payment period to the next you lose your ability to cash in on your rewards program. Take my Invest First card for instance. Through this card I am able to have 2% of all of my purchases deposited into an investment account through my bank. If you put all of your every day spending on that card, it would add up over time. If you spent $16,000 on that card for the year, you’d be pocketing an additional $320. For me, that’s the equivalent of one month’s deposit into my savings accounts. But how do you stay ahead?
Utilizing your card to its fullest
The single most important thing to remember about using a credit card in order to reap the benefits of your rewards program is that you have to pay the balance in full every month. That means having the cash on hand. That means that if you couldn’t afford it with your debit card or cash on hand, you can’t buy it. For me, that means having two cards. One for emergencies that I can put longer term purchases on, and my invest first card that I keep at a $0 balance by paying it off immediately every month. At only a 2% return on your purchases, even one month of interest could destroy any total benefits for the year, especially if you have a pretty high interest rate. It adds up quickly. You have to look at it as another means of using the money in your checking account, not as something in addition to the funds in your checking account.
Staying ahead of the game
As I mentioned, automated banking is by far the easiest way to stay ahead of the curve. It insures that you never miss a payment. You just have to make sure you’ve got the money in your account. If you can not pay your balance in full each month, then you should not be using that card for this purpose. I’ve made the mistake of letting my credit totals add up. I’m at least 6 months away from being free of my credit card debt at my current rate of repayment. I would much rather be saving all that I’m currently paying towards that card. Credit cards are great tools if you use them right. I don’t know anyone that wants to turn away free money, and properly utilizing a rewards card can get you pretty close to pocketing some extra cash.
