I Am Not Against Using Credit Cards To My Advantage.

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?

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Comments (6)

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  1. Miranda says:

    I am totally with you! Credit cards can be valuable financial tools as long as you don’t fall into the trap of thinking that they represent some sort of “available” cash. Remember that they are a loan. Pay them off before the interest kicks in. For me, it’s all about the free plane ticket to see my husband’s family. As long as you aren’t paying interest, the rewards really are free.

  2. I’ll second that. Credit cards can be your best friend or your worst enemy. Currently, I use the Chase Freedom card and I earn at least $15/month using it everywhere I go. The key for me, however, is that I pay it off IN FULL (not just the piddly minimums they ask of you) every month without fail. If I were to stop doing that, it would quickly turn from the Chase Freedom to the Chase Bondage card.

  3. Jackie says:

    I pay in full and have reaped the rewards on my cards for years. In addition, I was able to begin paying my monthly bills (utilities, etc.) using my cards for no charge long before it was free via my credit union. Now that I have them set up, and I earn rewards on the amounts paid, I don’t have much incentive to change a system that has been working well for me.

  4. SJ says:

    I think it’s kind of annoying the arguments pro- and con- re: credit cards.

    Pay them off goes without saying.

    However, I think the biggest issue is does the increased convenience cause people to buy more stuff? It they do then uh-oh.

    That said, I’m pro-credit. I’ve had a debit card identity theft issue once, and was panicing about making rent. At least credit cards I have one layer of protection.

    Now here’s a question, do you treat the cashback as “savings” or as a “bonus”… i.e. do you save it or go out and celebrate? hehe…

  5. I started out with my first credit card at age 19. I had read that I should get one, charge one small thing a month to it, and pay it off each month, to establish a credit history.

    I managed to do that correctly for about five months, and then I got into trouble. I was having trouble paying for my projects for film school, so I charged the necessary expenses to my card. I figured I’d pay it off during the summer.

    I did not pay it off during the summer. It took me two years to pay it off, actually. But as soon as I did, I went back to being a responsible credit card user – paying for things with my credit card and paying it off every month, to earn rewards.

    I’m on the fence about whether credit cards make people spend more. I’ve looked at the studies, and find them to be inconclusive: http://poorerthanyou.com/2007/10/12/do-we-spend-more-when-we-use-swipe-plastic/

  6. Melissa says:

    I also agree that credit cards can be a useful tool, though admittedly I am still paying off some CC debt.

    However, since becoming committed to debt elimination, I personally deduct any charge I make to my credit card out of my check register immediately…thus treating it like a cash transaction. Currently I only use the CC for online purchases and such where I feel the risk of identity theft is higher. However, once this final card is paid off I have considered paying for the majority of things with credit (I have an AMEX which offers cash back or rewards points) while still using the register deduction in order to make sure everything is paid in full each month. 99% of the time, I’m using my debit anyway, so what’s the difference which card I’m swiping as long as I’m being responsible.

    We have also been known to take advantage of Lowe’s 6 or 12 months no interest to complete some home renovation projects. We actually pay it off in the time allotted (thus not paying accrued interest) but I think it’s just another way to make our $$ work for us.