Credit cards get a bad rap sometimes. Because so many people end up over their heads in debt due to credit card use, it is assumed that credit cards are evil, and always bad for finances. However, this isn’t true. There are plenty of credit card super users who use their cards as financial tools, taking from the credit card issuers and giving nothing back. If you want to get all of the advantage from using credit cards, but not fall prey to the disadvantages, here’s what you can do:
Buy Everything with Your Rewards Credit Card
There are plenty of Canadian rewards credit cards that offer you the chance to earn cash back, travel rewards, discounts and merchandise. If you want to get free stuff and save money – and even get free cash each month – you should buy everything with your credit cards. Use your credit card to buy groceries, gas, and make other purchases. You can also use your credit card to pay your utility bills. Pretty soon, you will have enough points or cash back rewards to enjoy free stuff. As long as you pay off your balance each month, the credit card will get nothing back from you in interest.
Pay Off Your Balance Every Month to Avoid Interest
The best thing you can do is pay off your balance every single month. When you pay off your balance each month, you aren’t charged interest. In order to make sure that you are able to pay off your balance each month, incorporate credit card spending into your budget. Track your spending so that you don’t go over your limit, and only spend money that you actually have. You can spend conveniently, and rack up the reward points, but not have to give anything back through interest.
Redeem Your Points
Of course, your reward points are no good if you never redeem them. Keep up with how many points you have, and redeem them regularly. You can take the guesswork out of when to redeem your rewards cards by signing up for a cash back program that automatically sends you a cheque when you accumulate a certain amount of cash back rewards. You receive free money regularly - just for doing what you normally would.
The Importance of Having a Plan
If you plan to be a successful credit card super user, it is vital that you have a plan. Only buy things that you would in the normal course of the month. Budget your money, and stick to it. This way, your money can sit in your bank account for most of the month. Then, when the statement comes, you can pay off the balance – without paying any interest and while raking in the rewards. If you want to take it a step further, you can keep the money in a high-yield savings account for most of the month. You’ll earn a little extra in interest. Then, before you need the money, transfer it to the checking account so you can pay your credit card bill. Just make sure you allow enough time for the transfer from your savings account to your checking account before you need it.
With planning, you can turn your credit card into a valuable financial tool that features convenience and free stuff, while not costing you anything.
