The first thing people need to understand is that Credit Cards are both your best friend and your worst enemy. It all depends on how you approach your Credit Card experience. I’ve owned a Credit Card for a while and it’s my best friend. Companies can reward you for paying on time with cash back incentives, points, trips, gifts, anything under the sun, you name it and you can find a Credit Card that will offer it to you.
The problem with America, especially younger adults such as myself is that they don’t understand that it can be both a positive experience or a negative one. Credit Cards are basically mini loans. Every time I pull out my Credit Card I think to myself, do I have money for this purchase, if not, will I have money for this purchase before my bill comes due? The problem is that people convince themselves they have enough money or will find money to pay for their bill. Most College students or young adults won’t bat an eye over a small purchase but 100 small loans can be just as big as 1 larger one. Throw on a high interest rate and that collection of small loans becomes a powerhouse to be reckoned with!
To make Credit Cards a rewarding experience you need to keep a few things in mind.
1. More isn’t always better – Having 1 Credit Card can be more rewarding than having 10. A lot of Credit Card offers will offer Instant rewards that in the long run won’t stand up to what you could do with 1 card you use frequently. I have one card and I use the rewards points on cash back. I use my credit card for big purchases I don’t have money for immediately but know I can pay off fully come bill time. Just like all those small loans add up to be bigger than one large lump sum you would be amazed how fast you can accumulate reward points!
2. Interest Rates – Interest rates matter only if you let them matter. To be honest, I have no clue what my Credit Card interest rate is only because I use it as a get it now pay later kind of system. I won’t pull out my credit card unless I know without a doubt that I will have money for it later. Why spend cash on something when I can keep the cash safe in my bank account and get rewards for using my card responsibly? If you don’t pay attention to interest rates and you have a problem with overspending, you might want to reconsider getting a Credit Card.
3. The Rewards! – Rewards aren’t for everyone. Rewards are for the people who responsibly use their Credit Cards. As one of my College Professor’s said, “People who don’t use Credit Cards correctly are basically rewarding me.” Think about it for a second, why can Credit Card companies offer such sweet deals? The reason is because so many people don’t know the risks of owning a Credit Card. It is the people who go into a store and come out with a year’s worth of clothes or other goods and have no money to pay for it that are providing the interest payments to pay for my rewards. Rewards and meant for people who use their card right, not wrong!
Credit Cards aren’t meant for everyone. If you can manage your money and keep your cool when that Credit Card is burning a hole in your pocket you can successfully take advantage of the Credit Card Reward system!