Credit cards are a VERY dangerous monetary instrument. But they can help you as well! Different types of credit lines can improve your credit score. Credit cards are one way to diversify your credit history.
Here is all of my tips and tricks for selecting and using a credit card.
First and foremost- you HAVE to pay it off every month. Do NOT get a credit card to buy things you can’t afford! If you can’t afford them you can’t afford them! Make some money and save up and then buy those things.
If you pay your balance off every month you will never pay interest. That means you are paying exactly what you would have paid if you used a debit card. But you get the benefits we will talk about below! You do not want to pay for using a credit card!
Okay so how do you pick a credit card?
There’s a couple things you need to look at. First is a $0 annual fee. There are so many people out there paying their super high credit card interest those companies don’t need annual fees. Just another way to make a buck off you. So don’t pick those companies.
Remember, $0 annual fee!
The second thing to look at is what benefits does the card offer other than a line of credit?
Is it airline miles? Cash back? Points to spend at a specific retailer?
Then examine those benefits and see if you would actually use them.
For example, my husband and I are flying this fall for the first time in 5 years. So we would not benefit from airline miles. This is why we do not have a credit card that gives us them.
However, my husband is VERY into fishing and has a Cabelas/BassPro credit card. He earns points which he can then use as credit in the store. I will say this is not super ideal and he really only uses it at those two stores. On the other hand, we have a friend who uses his everywhere. He then uses those points in the store. It works well for him.
So ultimately, if a credit card with specific store rewards gives you benefits you will utilize, then that may be your best option. You should consider it carefully.
Another type of rewards system is cash back. Now in my opinion this is the best benefit program you can get with a credit card because it gives you cash that you can spend anywhere.
When looking to get a cash back card, look at multiple options. Select one to apply for after comparing them. They each have different offers and programs.
For example I have one that is 1.5% cash back on all purchases. That’s that.
I have another one that is 1% on all purchases. Each quarter, I can select different types of purchases to earn 2% and 3% cash back on. These categories are predetermined on each percentage. However, it’s an easy way to earn a little more cash back on purchases I’m already making. For example, my internet bill is on auto charge for this card. So each quarter I will select the category “bills and utilities” to earn more. This way, I can take advantage of that extra cash!
If you’re wondering if the cash back is really worth it, it is! I use my credit cards for 98% of my purchases. I have over $1,000 in cash back rewards just from the last 7 months!
I save all of my cash back rewards until November and then withdraw them to use for Christmas shopping! This makes the expense of Christmas gifting way less painful for my wallet!
So remember!
- Pay it off every month!
- Look for $0 annual fee
- Pick a card with a reward system that works for your lifestyle
If you’re looking to start using a credit card I always recommend getting one and using it for gas ONLY. This is something you have to purchase anyways. Then pay it off as soon as it clears onto the card account! I pay my cards off daily. The second a charge goes through I’m paying it off to keep that $0 balance and no interest! Once you get comfortable owning and using the card you can gradually add what you use it for.