In the last month or so, I have gotten a few emails asking why I talk about using credit cards on this site. I took the time to answer the people directly, but I wanted to mention it here just in case there was anyone else wondering. I am not, contrary to what some may believe, anti-credit card. I have credit cards, my wife has credit cards, and we use our credit cards. Often. In fact, I have 5 credit cards and my wife has 2, and we have about $200K worth of open credit to our name. So we would be pretty far from being anti-credit card, yes? I charge almost all of our monthly expenses to my Chase Amtrak card so we can take free train trips every year, and my wife charges all her expenses to her Working Assets card which gives money to charity when you use the card. And for my business expenses, I still use my American Express Business Gold Card, which I will continue to use until I have enough points to get a decent reward. (And then I will switch those to my Amtrak card as well) So, far be it from me to tell people not to use credit cards! In fact, I have quite the opposite opinion of them…if as a card user you can follow a few easy rules:
Pay off the card in full each month
Paying interest on monthly charges is a recipe for disaster that will only continue to snowball.
Take advantage of 0% interest offers if you carry debt
If you have decent credit, there is no reason you should be paying high interest rates on any debt you are trying to pay off. Use credit cards that offer you 0% interest for balance transfers to reduce the amount you owe.
Don’t think that open credit is “free money”
If you don’t have the money in the bank, in cash, you don’t have the money. Period.
Use a card that has rewards that match your needs/wants
Fly American Airlines a lot? Get an AA rewards card. Like getting cash back? Sign up for a cash back rewards card like the Discover More card, which gives you between 1-5% cash back on all your purchases. Travel Amtrak? Get the same card I use most often, the Chase Amtrak card.
While everyone has their own reasons for using/not using credit cards, I believe that credit cards, if used correctly, can offer real benefits to their users. From getting free money to miles to rewards to 0% interest offers to purchase protection, credit cards definitely have a place in my life and on this site. I hope that helps answer those people who wonder how credit cards can be a valuable part of any personal finance program! What do you think?