That is simple, don’t use them. This is what most personal financial bloggers preach around the web. They are WRONG!
If Credit cards are used diligently, they are a useful tool to save money. They offer excellent consumer protection, tons of bonuses, financial automation, and they’re an interest-free loan if you pay them off in time.
Not only financially advantageous, but credit cards are easy to hold in a wallet instead of going around with a pile of money. Credit cards look sexy. And are easy to use. Did I mention that your cash is useless online?
But hey, I love credit cards and you should too. Credit cards are the best way to use FREE money and get rewarded for it.
I’ve two credit cards; MasterCard and Visa. And you know what Pal, I got my first credit card at the age of 21 by accident.
THE STORY OF MY FIRST CREDIT CARD
It Was an Accident And I got Furious With The Bank
I applied for a bank account in UK with my first job. I got the debit card with the credit card in the mailbox after few days.
I was furious. I never applied for a credit card. And I knew that credit cards are EVIL because people go broke all the time when they get sucked in the spending mania. Why the heck the bank send to me this EVIL plastic card?
My first thought was; The bank is trying to make me use the credit card, so they can make hefty profits on my shoulder. No with me MR. bank, I’m smarter than you.
I didn’t bother to go to the bank and complain, anyway the card was free. And I had better things to do like going out partying and enjoy life. So, I kept my new credit card in the wallet and never used it. Until, I had to book a flight to Italy.
You would not believe me Pal, but the next day I was in the bank paying back the money used to purchase the flight ticket. No way I’m going to pay fees to the bank.
I asked the teller about the grace period for my credit card (I had no clue back then). He told that I should pay back any previous month balance by the 15th of each month. Really?
God bless for this discovery! I could use FREE MONEY. Thank you, Master Card and Visa.
IT WORKS LIKE THIS; Most banks required to pay back the credit card company by the 15th of the month. If you use the credit card on the 1st of the previous month, you get 45 days time to pay it back.
However, if you use your credit card on the last day of the previous month, you have only 15 days of credit. So, it’s worth postponed the purchases to the next month whenever possible.
And because I got free money from the credit card company you might think me going on a shopping spree and party like a rock star, isn’t it?
Nope. My lifestyle was unchanged. The only difference was, I deposited all my saving in a fixed account paying me 3% interest while using the credit card for my daily expenses. Sweet!
I never paid a credit card fee in 13 years, but I enjoyed all the benefits.
Pal, are you wondering who pays for these benefits? The people use credit cards to buy things that they can’t afford. They get caught in an eternal debt circle. Pay the monthly minimum but never be able to pay off the principle. This because credit card interests and penalties are exorbitant.
WHY SHOULD YOU USE CREDIT CARDS
Good question Pal! Using a credit card when you have cash might sound insane, but it isn’t. In my chef career, I saw so many super wealthy individuals to use credit cards the smart way. You know, to get cashback on their spending or a discount on the final bill for using, for example, a Dining Club Credit Card.
As opposed, working class people who couldn’t afford to dine in the restaurant use the credit card because they had no money.
Let’s learn the benefits of using credit cards;
~ 1. Sign Up Bonuses And More Bonuses
For applicants with a good credit history, they can apply for special credit cards which offer bonuses value between US$50 to US$300. That is a pay day, just to fill in a form and apply. Some credit card goes extra miles by offering generous bonuses if you reach a minimum monthly spending.
~ 2. Get Rewarded For Spending
I mean, duh, right? Why use cash when you can the credit card reward you to swipe. It might sound too good to be true, but a reward credit card does exactly as the name suggests – it rewards you for spending.
There are all the sort of rewards such;
- Free Travel miles
- Exclusive discounts
- Cashback
- Free nights in hotel
Cool, isn’t it? My preference is to use credit cards with cashback reward. The more I spend, the more money I get back on the end of the month.
If you are planning to travel, google; “best credit cards for travelers in… place your country“. Yoo can get air miles to travel for free, or almost. Easy peasy.
~ 3. It Is Safer
Imagine to go around with all that cash during sale season. Cash has no name on it, a credit card has. Plus is sexier to have a thin wallet with few plastic cards than a roll of cash in the pocket. Ok, if you’re the son of Al Capone than you might prefer cash.
One more thing. Paying with a credit card makes it easier to avoid losses from fraud.
~ 4. Grace Period
Using cash or debit cards, your money is gone instantly (adios amigo). When you make a credit card purchase, your money remains in your checking account until a couple of weeks later when you pay your credit card bill. You’ve between 15 to 45 days grace period.
~ 5. Consumer Protection
Having some extra layers of protection is always a good thing, especially when is free. Do you agree? Credit cards offer a wide range of protections such as travel insurance, rental car insurance, and extended product warranty.
Sure, there are more perks to the trade, especially for the high-end credit card (American Express). Read the booklet carefully when applying for a new credit card.
…So, have I converted you? Are you on board with the credit card strategy? Sweet. Now, let’s chat about when you shouldn’t use a credit card.
3 IMPORTANT POINTS; AVOID CREDIT CARDS
Despite the fact that using a credit card correctly is advantageous, for some people it’s better to use cash or debit cards.
My wife is one of them. She had 7 credit cards with some US3.000 debts when I married her. I paid off the balance and cut all of them. She is banned from life to use a credit card.
Using a credit card may not be right for you under the following circumstances:
- You spend more than you can afford; remember, credit cards want their money back and if you don’t pay back, the interests are stratospheric. 10-25%. Get a loan, it’s cheaper.
- You forget every month to pay back the credit card balance; fees rack up fast, better you stick with cash. You can set automatic payments with your online bank account.
- You are broke; using a credit card will not help you to get out of debts, actually the opposite.
These are the reasons you should avoid credit cards, but if you think of more, let me know in the comment below.
Alright m’friend! I hope this helped you to clear some idea about credit cards.
Got question about credit cards? Ask ’em down below, pal!
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