Are You a Credit Card Super User?
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 – not instruments of financial ruin.
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 Credit Card
That’s right. Buy everything you normally would according to your budget with your credit card. Simply change the way you pay for things. Instead of writing checks or using cash, use a credit card instead.
Use your credit card to buy groceries, gas, and make other daily purchases. You may also be able to use your credit card to pay your utility bill, phone bill, or other recurring purchases. Pick up the tab when out with friends (and get their share of the bill in cash). Basically look for “swipe opportunities” to maximize your rewards.
Buy everything with a credit card? Are you nuts?
This plan only works if you are financially disciplined. Being a credit card “super user” is about taking what the credit card companies give you, and paying nothing back in return. For these savvy spenders it’s all about earning rewards.
Not Just Any Credit Card Will Do
There are plenty of rewards credit cards that offer you the chance to earn cash back, airlines miles, travel points, retail rewards, merchandise, and more. It’s important to find a card that fits your spending habits and also has a rewards program that excites you. Take the time to research various rewards programs to find the best one for your situation.
Pay Off Your Balance Every Month to Avoid Interest
To take full advantage, simply pay off your balance every single month – in full and on time. 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 or other fees.
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 – maybe every 6 to 12 months. It’s important to reward yourself, and fun too! You can also 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 a little something back – just for doing what you normally would.
The Importance of Having a Plan
If you want to be a successful credit card super user, it is vital to 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 proper planning and a little dedication, you can turn your credit card into a valuable financial tool that adds to your bottom line, without costing you anything.