I disagree with many financial experts in that I believe that credit cards are a good thing to have if you are responsible with your money. It’s all about tracking your spending. In fact, I have a harder time controlling my spending when I use cash since I can’t track it in my Financial Aggregation Tool. Here are my Fave 5 reasons that I have a credit card.
5. Float your debt
I pay my balance in full every month so I don’t accrue any interest. In essence, I am getting free interest on that money every month. For example, if I pay a $100 electric bill every month with my credit card, I can keep an extra $100 in a Certificate of Deposit or Money Market account to earn interest.
4. Get gifts/rewards for signing up
From cash to free toasters many cards offer some sort of incentive to sign up. As long as you don’t go crazy signing up for every card that has some kind of gift with it you can use this to your advantage.
3. Save on interest
May cards have special terms on interest. 0% or reduced interest rates… some are promotional and some cards have a fixed low interest rate. Use this in conjunction with Reason 1 (float) and you can get some extra interest. Just make sure you read all the fine print and have the money to pay in full when the promotion period ends.
2. Get a reward for making purchases
Get cash/points/rewards for spending. If you’re going to make a purchase anyway why not get an instant 1% discount. Just don’t go overboard with chasing points.
1. Build your credit for big purchases
And the NUMBER 1 reason for getting a credit card is to build your credit. Some day you may need financing. The deal specialist does not believe in financing for cars (unless you can get <3%), but someday you will want to buy a house. Easiest way to build up credit is to get a credit card.
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