Everyone has their own opinion on credit cards and in fact, I was absolutely terrified of them just a few years ago. Thank goodness that I learned these two benefits of using credit cards because now I can take advantage of them rather than be fearful of them.
I first learned to love credit cards when realizing what our credit score is made up of. 35% of our score is from payment history: paying bills on time. One of the bills in this category is credit cards. So automatically 35% of my credit score would look great if I paid my credit cards on time.
Then, I learned about all the rewards! Here are two common rewards and the ones that I benefit from the most.
Cash Back Rewards – Many credit cards will offer 1-5% cash back on your purchases. This means you buy something for $1,000 and instead of using your debit card or cash, you use your credit card. You earn $10 to $50 in cash back just because you purchased that item with your credit card. You can look at is as the item being discounted by 1-5% or that you are earning 1-5% by buying that item. Either way you’re winning.
Airline Mile Rewards – There’s also many credit cards that offer airline miles when you use their credit cards. Some even pay for TSA pre-check for their credit card holders which is about $85.
The easiest change I made was using my debit card less and my credit cards more. I buy everything that I can on my credit cards to maximize the rewards that I receive. The part that people fail to do the right way is to remember to pay the balances before any interest accrues. Usually this is at least 30 days after a purchase is made. And another part is using their credit card as if it’s “their money”. Unsecured credit cards are “other people’s money”. You are borrowing it and must pay it back; this is common sense but a major idea that people forget when using credit cards.
How I Never Pay Any Credit Card Interest So you are probably wondering how I put everything I can on my credit cards and not pay any interest.
Two rules of thumb I live by –
1. If I don’t have the money in my checking account, then I do not put it on my credit card. It doesn’t matter if my credit cards tell me I have $30,000 available, I can not afford to pay $30,000 in 30 days therefore I don’t use that amount. 2. To avoid missing a payment and interest accruing I pay my credit cards multiple times throughout the month. Typically, my credit card statement will say $0 as my minimum payment because I’ve already paid the balance down before the statement is due.
Switching from your debit card to your credit cards when you can but also treating your credit card like a debit card (or checking account) can provide many benefits for you because of rewards like cash back and airline miles.