Credit Cards - Using them right

We've all heard horror stories of endless debt or perhaps you've experienced first hand the horrors of a credit cards gone bad. Let's be honest its really easy to spend money with a credit card. You don't physically touch the dollar bills that you work so hard to get, and that fun little plastic card will be taken in exchange for just about anything these days. You just go to a store, tell a vendor that you want something, give them a magnetic piece of the plastic, they smile and give that precious item. It's fascinating really. The topic of human consumption and control the two main thought processes is that for another day. Let's take a look at how you can use credit cards for good and not evil.

Using a Credit Card the Right Way

It's a free 30 day loan. 

This is the primary function and benefit of using a credit card. It doesn't matter if you get paid every week, every two weeks or every month. You only have to pay for all the goods you buy and consumer during a month one time. Let your paychecks sit in the bank account and earn a few extra cents or dollars before you turn some of it over to the credit card company. I know it may not seem like a lot. What's the point, my interest rates or so low? The point is that it takes no effort to leave that money in your bank and in the long run you'll earn a decent amount of money. As time goes on and you save, as you love to do right?, this habit you've become accustom to with start to pay dividends that you can feel. Remember those wise words, "Take the money Lebowski," sage advise if you ask me. But it's important to get in this habit. Take the free 30 day loan and earn a little extra interest on the money in your bank account. 

It pays you back

One of the amazing things about a credit cards is that it can pay you bank. It's a very competitive market out there, with a lot of companies battling hand over fist for you. As a results there are a lot of great deals that range from cash back cards to cards with some pretty amazing point systems. Now I'm not saying you should spend money to make money. A few extra impulse buys are never worth a few extra points or cash back dollars. Trust me, I've been there and realize how stupid I was. What I driving it is why not save 1, 2, even 5% for the things you buy anyway? I love saving money, I clip coupons, I find online deals and I use them every chance I get. And on top of all that I save an extra 5% every time I go the grocery store. How? With my credit card that's how! I get 5% cash back on every dollar I spend there. I need food, and love food for that matter, so there really isn't avoiding this monthly bill. The great part is at the end of the month I get a nice little 5% of it back. It's a fantastic deal and I love. Sometimes I take the money and put it in my savings accounts, sometimes I use it to buy more groceries and sometimes I buy myself a little something special, because hey I'm worth it. 

It builds credit, ya you know that mysterious credit score

It's typically a small part of your overall credit score but if used right it can be very helpful. One of the most important parts of you credit score is your credit history. Typically this input is in fact the most important factor in calculating your credit score. Credit history is simply the number of years and months that a financial institution or creditor said, ya we know this person and we've been loaning them money. A credit card is fairly easy to get, so get one early and use it right! Get one for you little brother or child and to them a life changing favor. Use it once a year to buy a coffee, pay it off and then stick it back in the closet. 10 years from now when they have an awesome credit score, they can thank you in spades. So the point here is that have a 5, 10 or 15 year old credit card will really help you at that point in your life when you want to buy a car, a house, or hell a mega yacht if I'm helping you rich your financial dreams. It doesn't matter if you have a credit limit of only a few hundred bucks a month. The fact that Visa, MasterCard or American Express can vouch for your 10+ relationship as a good customer and trustworthy debtor, is all you need.

It's safe to carry and shop with a credit card

I see this as an often overlooked value add of a credit card. We've all been in situations where you lose your wallet or purse. Sometimes you leave it under a chair on that hot summer day. Or maybe you leave it on top of your car in a parking lot and drive off none the wiser. And sometimes life just really bites you in the ass and someone steals your wallet in a subway ride to work. It happens, and if it hasn't happen to you I'll put my money on that it will at least once in your life. As terrible as it is it's nice to know that when you lose your credit card it doesn't cost you a thing. Just call your credit card company within 30 days, but don't procrastinate do it the first day, and tell them your card was lost or stolen. They will thank you for the call and cancel any charge that happened after you lost it. That's their job and the allocation millions of dollars everyday to battle these fraudulent charges. Zero cost to you, now all you have to do is pick out a new wallet at the store. Lost a wallet full of cash and you're out that whole amount. No amount of asking or pleading with the US Treasury is going to convince them to send you a envelope full of cash. The same benefit goes for making purchases online. I know it might be a little weird or make you nervous to enter your card number on some random website, but the credit card companies know this and the plan for it. Should your number get stolen and some little punk in Florida go nuts at a video game store with it, it's no skin off your back. Tell your credit card company those are fraud charges and them whip them off your record. Again the know this stuff happens and they spend a lot money every year to prevent that transaction from going through, and cleaning up the mess after it happens. All you have to do is know where you spend your money and start kicking and screaming when something on your bill doesn't fit. Never been to a Dairy Queen in Montana? Me either, so you can rest assure that I'm paying for a blizzard on my credit card bill should it show up one month.

So while there are many reasons to hate a credit card if used right here are just three great reasons to use a credit card as your primary tool when buying all that stuff you just can't live without. 

  1. It pays you back
  2. It helps build your credit history and credit score
  3. It's safer than cash