Credit Cards Are Awesome!

Regardless of what you may have heard, credit cards are pretty awesome financial tools. It’s one of the best forms of credit that you can access and use to help you reach your financial goals.

Unfortunately, credit cards can also be one of the biggest culprits of financial chaos. 

Credit cards are a tool. They are not evil, though you’re open to criticize credit card companies and other financial institutions.

• Maybe not an expert level, but being able to maximize the benefits of credit cards and limit the potential downside takes a strong understanding of your finances.
  • Downside: spending more than you should
  • Paying interest (as high as 25%!)
  • Can weaken your credit score
  • Relationship tension
• The amazing benefits when you do know where your money is going and have financial control are very generous:
  • Sign Up Awards
  • Cashback & Travel Miles
  • No payment for a month
  • Build a strong credit score
  • Never pay a cent!
• Tips:
  • Annual fee may make sense if you spend a certain amount. 
    • Do the math to see if your expected spending would benefit from the additional boost
  • Calculate the best sign up award based on your NORMAL spending
  • Never spend more than you need for REWARDS still a percentage.
  • Automatically pay in full every month. 
    • Don’t try to do this manually.
  • In case you have a few different cards or accounts, use something like Mint or my clients have a Wealth Management portal to see everything in one spot.
  • Can optimize for spending categories (dining out, entertainment bonus points)
  • Can optimize for rewards (travel, cashback)
  • If you’re not ready, don’t try. Like I mentioned you have to have good habits of understanding where your money is actually going in order to maximize your credit card benefits and not have things backfire on you.
    • Supposed to be helpful, but if it’s going to be stressful don’t bother.
  • Review credit cards with annual fees regularly. If you have multiple credit cards with fees that may take away from the benefits.
    • We run everything through one.
  • Don’t pay the minimum!
  • Carrying a large balance owed relative to the credit line can hurt your credit score