Note that today’s post will not work for everyone. You must have a strong will and some serious discipline to use credit cards exclusively, but it can be worth it, for many reasons…
Why We Use Credit Cards Exclusively
We’ve all heard how bad credit cards can be. Yes, they CAN be, but they can also be great tools for establishing credit history while also building or maintaining your FICO credit score.
IF USED EFFECTIVELY credit cards can be a girls best friend. Keep your diamonds, I want financial stability, mmmkay? 😀
Let’s face it: CREDIT MATTERS!
As I told you last week, Paul and I each had thousands of dollars in credit card (a.k.a. “bad”) debt when we met. He had a Dillards card that he used for Christmas shopping – and paid on all year longamong other cardsincluding gas cards, time shares (no, really) and more.
I had two credit cards that I had maxed out then paid down just enough to max them out all over again. I’d often have to make the minimum payment just so I could afford to pay my apartment rent and utilities. I was in my early twenties, going to college, working three jobs (really, it totally sucked) and dealing with a live-in boyfriend that had the financialsense of a rock. It was UGLYand a viscous, seemingly never-ending cycle folks. Thank God that guy’s an ex, huh? We’ve all got one sweeetie. 😉
It is so EASY to get caught in credit card purgatory and it can be HARD to dig your way out.
Yes, it is hard to get out from under, but the more discipline you have, the more dedicated you are to being debt free – the more motivated you are to keeping it that way, the more successful you will be.
Paul and I now use our credit cards for EVERYTHINGwe buy. If I stop in the gas station for an extra newspaper one week, I put it on my credit card. Just $2? YES!
You need to know going in that this method will not work for everyone. You must be extremely dedicated and resist the urge to “just pay half” of the balance one month, and continuously pay the ENTIREbalance at the end of the month. Every. Single. Month.
We use our credit cards exclusively for sixmain reasons:
1.) REWARDS:
Many credit card companies nowadays offer incentives for you to use their card as opposed to another. Many offer cash back, like the 1% cash back on EVERY purchase I enjoy with my main credit card, and every quarter of the year there are highlighted EXTRA cash back offers, during which I get a whopping 5% in three categories such as restaurants, gas stations (including gas!), Kohl’s, Amazon purchases and more.
Paul and I build these rewards up and redeem them for restaurant gift cards for our {rare} date nights, or if we have a large purchase coming up at a home improvement store or if he wants a new TV etc (he brings that up about every other month, lol!) we can redeem for a Target, Walmart or a Lowe’s gift card instead.
Lately we have been redeeming our points for FREE flights for vacations. Like when we went to New Orleans last December, our flights were nearly FREE! Look in your card company’s Benefit Guide to see what rewards your current card offers and make sure you opt in for the additional cash back if necessary. It may not be automatic!
Shop around for the best rewards program. I advise you NOTto open a NEW credit card simply for the points, but if they are also offering a nice interest rate (or a balance transfer promo that beats your current interest rate) it may be something worth looking into.
Disclaimer: always read the offers and fine print carefully and consult a financial advisor for assistance before making a final judgement or opening a new card.
2.) EASILY TRACK SPENDING
Before Paul and I started using our credit cards exclusively, we would use a little cash here, make a little debit card purchase there, and it added up much more quickly than we realized and it was HARD TO TRACK.
I’m a big numbers person. By using the credit card exclusively, I know exactly what I have spent for the month all in one place on my statement, and I can curb my spending if needed.
I am constantly looking for ways to cut costs. About once per quarter – at least twice a year – I print out the last 3 month’s statements and analyze my purchases, looking for ways to save even more or areas where we can make cuts.
Some credit card companies will categorize your purchases for you!
This can also be a nice tool if – God forbid – your home has a fire or other natural disaster and you lose all of your receipts for tax purposes. This is extremely important for business expenses etc. If all expenses are on a card, they are available for you to access and print online. Some keep records dating back years!
3.) CARRY LESS CASH
Have you seen all of the reports of ATM skimmers lately? Crooks will place a device on an ATM, and swipe your information as you’re swiping to get your cash. They’ll even place a camera near the ATM to try and capture your PIN number. Yikes, right?! THIS IS NOT NEW!
We do not carry cash – or very little – nor do we use our debit cards for ANY of our purchases.We treat our credit cards like debit cards instead. I find that I think harder on the few splurge purchases that I DOmake when I use a card instead of cash.
4.) FRAUD PROTECTION
Most credit cards offer some form of fraud protection when you’re using their card, meaning that if your card is hacked or an unauthorized purchase is made, the credit card company can easily reverse those charges. If your debit card or banking information is compromised, it can be much harder to regain those lost funds.
5.) TRAVELLING
Credit cards are a must while travelling. I don’t know about you guys, but when I travel I’m roughly 99.5% certain that I LOOK like a tourist. HA! 😀
You may as well paint a target on my back, and what is the one thing tourists ALWAYS have? Money {CA$H} to pay for things, and crooks know this as well.
If you do get your wallet or purse stolen and somebody manages to make purchases on your credit card before you report it stolen it’s never a big deal as your credit card company will credit you back for those purchases. However, if they get their hands on cold hard cash you’ll likely have to just write that off as a loss.
Some credit card companies also offer a car rental insurance service – apart from the insurance you would pay for with the rental agency. Don’t overpay for that insurance on a rental car if your card offers that same {or similar} protection for FREE!
If you travel abroad, you may be able to get a better currency exchange rate through your credit card instead of an exchange company at the airport or a bank.
6.) KEEP THE GOOD CREDIT FLOWING
If you are dedicated to paying off your entire statement balance monthly, you will accrue no interest charges, regardless of your current interest rate. Of course, to do this you must remain steadfast in your conviction to pay the entire statement balance each and every month.
Consistent, timely payments are among the fastest ways to build your credit score.
Some of you will not agree with the way Paul and I handle our finances. And that’s okay! This method would NEVER have worked for a younger version of myself, and placed in other circ*mstances I don’t know that it would work for the adult me, either. Thus, I don’t expect everyone to have the same view and opinions as we do. No hard feelings. 😉
If/when you are ready to try our method there are some things to consider:
-Don’t put TOO much on your credit card(s). If you are a responsible spender, you will never spend more in one month than you’re bringing in. Do not charge more than you are able to pay off. If I couldn’t/wouldn’t be able to pay cash for it, I won’t charge it either.
-Do NOT use this as a means or an excuse to overbuy. Enough said.
-Keep your main spending on 1-2 cards, mainly using the one with the best rewards. If you’re paying them off every month the interest rates do not matter, rewards do! The fewer cards you use, the easier it is to keep an handle on your spending, and easier to remember due dates etc.
-Just because you stop using a card – or better yet, pay it off – that doesn’t necessarily mean you should close the account entirely. Keep cards with low or zero balances open {especially the oldest cards you own} and if you do choose to close them, close them no more frequently than one every other month. Closing cards can ding your credit score just like opening them can.
***You are ultimately responsible for your credit card purchases. I am simply providing you with information and the reasons why this works for our family.***
Related:
Paying off Credit Card Debt
