Meet My Best Friend - My Credit Card

You may be wondering why I think credit cards are useful in getting you more money. Usually, we associate credit cards with high interest rates, uncontrollable spending and debt. On the other hand, if you’re like me, I see a little plastic card that can be like another investment for me. Through getting rewarded for my spending and building my credit, they are so many advantages and the benefits don’t even stop there.

In this week’s article I will be looking at several unique benefits as to why you should be using your credit card and nothing but your credit card for your current expenses.

Hint: Do your research – fees on credit cards can be high so find a card that fits your needs. The majority of no-fee cards out there provide good benefits. The only scenario in which high fees can be good, is if the rewards that you receive offset the costs of being a card holder.

Benefit 1: Getting paid/rewarded for your spending.

I don’t know about you but there are few places that will actually pay or reward you for your spending. Personally, I love cash back cards as this way I get the cash and there’s no two ways about it. Cash back cards are cards that will give you anywhere between 1-4% (rates may vary) on the total amount of money you spend per pay period. Yes, you’re not hallucinating they actually do reward you that much!  Cards, may even reward you for your spending through travel points, additional perks, movie tickets and much more.

Let’s take a look at the following example: Suppose in a month, you have expenses of 625$ dollars on your credit card: This can range from groceries, going out money and even monthly  bill payments such as cellphone plans.

Assuming a Total of 7500$ spend on a credit card in 1 year

 

Benefit 2: Get Now, Save Now and Pay Later.

One of the best benefits I enjoy through using my credit card is the fact I get to hold onto my money longer instead of forking it over on spot by using cash or through debit. The majority of credit cards out there offer a grace period – usually 21 days until they need payment. That means I get to hold on to my money for an extra 21 days. In addition, many credit cards offer additional perks such as extended warranty and theft insurance. This protects you in some cases from your product being stolen and even extends you warranty on products bought on the credit card – at no extra cost. Keeping your money in your account for an extra 21 days roughly equates to 8$ a year or two trips to Starbucks or 5 trips to Tim’s or which ever way you want to spin it.

Benefit 3: Building Your Credit.

Even though this method may not reward you with income, buying on your credit card and paying your bills on time go a long way in building your credit. Credit bureau’s pay specific attention to your credit history and look at certain qualities like if you have a credit card, what’s the limit and most importantly if you are paying your bill on time. When applying for a loan, car lease or mortgage, banks and lending institutions will look at your credit history and look for some of these points. They want to see someone who has a credit card and pays it on time as this is a representation of someone who is financially responsible.

In summary, moving your expenses over to a credit card can be very rewarding. From the cash back earned to the free movies, it packs so many advantages onto a little piece of plastic. I want to clarify that I do not recommend to spend frivolously on your credit card – but rather to move over the majority of your current expenses onto your credit card to take advantage of these benefits.

 

Disclaimer: All the above information is my own personal opinion. Having a credit card and paying the bills on time may not guarantee you a high credit rating. Check with banks and websites to verify eligibility criteria and any other pertinent information. Examples are based on average spending of 7500$ a year and those credit cards have little to no fees. Do not spend excessively to obtain cash back rewards or other perks. 

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