Lately, I've been reading books, articles on the internet, and blogs on how to decrease debt and save money. Throughout the articles and books I've read, some suggest that using a credit card is awful! Well, I completely disagree, if you have the power to pay everything in full. I was so tired of reading these money saving blogs talk about only using cash. I just had to get this post out there! Many of this information is not new, but it's always good to be reminded. I am no expert on credit card information but for the average consumer here is what I learned and why I use a credit card.
1) Establish Credit
This is the most important reason why I use a credit card. When making big purchases like a car or even a house, the businesses will always check your credit. And with that, you need to use a credit card. Now, don't make big purchases if you don't have the money and you use your credit card. My mom gave me a credit card just buy books for college and she would pay me back. (My parents were able to afford my college tuition and expenses, plus I lived at home during college.) The first thing she told me about the card, was that I needed to establish credit, and when having a card always pay on time. When you don't pay your bills on time, the credit gets worse. Many of you readers already know that but if you are like me, it's always a good reminder.
2) Getting Points and Rewards
Before you read this, I must warn you: DO NOT go on shopping spree just to get rewards from your cards.
When I got my first two credit cards, I didn't understand how much I should spend before I got the rewards. I just used it to buy things and never paid attention to my rewards. Now, after seeing what is offered, it is better to do your research and see what you can be rewarded for. I used to have a Disney card Their reward was basically having a Disney gift card but then I realized that I wasn't spending very much on Disney products. Although, Disney has some great products, I don't need what they offer at this moment in my life.
I replaced that card with a Chase Freedom card, which offers me cash back. (I probably need cash more than anything right now.) And since I do have a Chase account, extra rewards are offered. You can even get more cash back (or extra points) when you go on their website and online shop through many of the list of companies they offer. Each company has a different percentage of how much cash back they will give. And with the Chase Freedom card, their are certain categories that I will get 5% cash back every quarter. Usually with those quarters, match the season. For July-September, I can get 5% more cash back when I spend it at gas stations, Kohls, and Theme parks. But always read the fine print on what you spend is considered cash back. The theme parks portion is only if you buy a ticket for a theme park directly through the park. Not if you spend money on the food or merchandise in the park.With my card, and other cards, that promise to give cash back, they also have gift cards available and other products. Sometimes, it is better to get an "on sale" gift card because it will use up less of your points. For example, a $5 gift card will normally cost you 500 points. But for those on sale, $5 gift cards will cost you 450 points. Before you get the gift cards, just make sure it is in your budget and you know for sure you will spend it in that place. They are also good for gifts as well.
3) Cards don't allow you to carry a lot of cash
For safety reasons, I don't like carrying a lot of cash. While working on a college campus in my early college days, I had about $100 stolen out of my wallet. It was heart wrenching and made sure it didn't happen again. It is good to keep cash on hand if it's your way to stick to a budget or when stores don't accept anything but cash. However, the more cash you have in your wallet, or in a safe, it is at a higher risk of getting stolen. And if it's stolen, most likely you won't get it back. If a card is stolen or lost, the credit card company can just issue a new one and can stop payments on the stolen one.
4) Pay on Time
Before getting a credit card, you NEED to do your research, read the fine print and also see how much YOU SPEND! Credit cards are a way of borrowing money and that could come at a cost if you don't pay on time. Think about it, when you loan a friend or family member $50 and they say they will pay you back, but you don't get the money until months later! Doesn't that frustrate you a little bit? Credit cards want their money back so they charge you interest rates. Interest rates are high and I hate spending extra money on something that I don't need to. And with interest rates, it's like your getting charged for not spending anything, just owing money. With today's technology, it is easy to pay on time. You can always check your balances online and pay the outstanding balance even when the billing cycle is not finished. Unless you don't have the money, pay your balance in full. And also when you don't have the money, don't spend it unless it is a NEEDED item like food or gas.
5) Track your spending
Check on your credit card website to see how you can track what your spending. It will help you be a little more wise on your spending habits and see what you are actually spending. This summer was pretty crazy with many activities and events. Tracking my spending helped me put myself into perspective and I found that I was not saving any money during two months. There are many free apps and websites that help you track your spending. My boyfriend introduced me to a free app called: Spending Tracker from the MH Riley Ltd. I love it but you have to manually input everything you spend or recieve. It does not ask for any credit card info or your checking account. Or you can do the old fashion way and use a notebook. Also, having a credit cards statement may help as well, but that can take time. However you do it, tracking a good thing.If you are still uncomfortable at the thought of using a credit card, don't use it for everything. You can use it for one or two categories, like gas, going out to eat, or groceries. Or you can start using a bank issued debit card that is also the same as a credit card. They will take your money automatically from your checking account. Either way, you need to establish credit.
Also, for anyone that is starting college this is really good information to have. So many people on campus will sell students a credit card and it's easy to get caught up in the hype. Always read the fine print and make sure you are spending smartly.
Have wonderful day!
