As advancements in technology continue, many people no longer carry cash. Instead, they pull out their trusty debit card for nearly everything they buy. The next time you go to retrieve it from your wallet you may want to consider what you are getting in return. The answer to this question is nothing. Yes, you have the convenience of not having to stop at the bank but it doesn’t offer any other benefits. Many people are catching on to the advantages of using a credit card that offers rewards instead.
Some of the best credit cards offering cash back rewards give you other options as well. Many of the more popular cards have no annual fee and other advantages include 2 to 5x earned points for things such as dining and air travel. Others give you 1.5% back on any sale you make. If you have several of these cards you can use them for your groceries, gas and other frequently purchased items. When you receive the bill pay it in full to save even more.
If used the right way, credit cards give you a way to hold onto your money. If you pay the bill in full within the thirty days you can avoid any interest or penalties. However, if you use cards for daily expenses and large purchases and then only pay a part of the bill you’re going to end up maxing out your cards and falling deeper into debt. Also, by only making a partial payment you’ll end up paying 2 to 3 times more than you would if you paid with cash. Besides, if you exceed your credit limit you’ll add on more fees.
You should only use a credit card for a true emergency or as a convenient way to shop without using your account. Getting in the habit of using it for things you want rather than need can put you into financial ruin in short order. Once you’ve maxed out your cards you’ll apply for new ones and so on. Pretty soon you’re not able to pay all them on time and then you’ll lose even more money.
The key to having a credit card is not to use it as a way to get things you can’t afford. If you keep it on you for emergencies then you’ll have it available should the need arise. It’s better to get yourself on a budget and stick to it. Chances are good that if you are using your credit cards for anything else you need to sit down, sort through your bills and get back on track. You can begin by cutting out non-essentials, such as lunches away from home and dinners out. Also, check your cable bill to see if you can save a few bucks there, too. There are many ways to reduce your expenses and get out of the bad habit of using plastic the wrong way.
A credit card can give you peace of mind during a time of emergency. This can include things such as a temporary loss of wages or unexpected repairs. If this happens, it’s best to try and make more than the scheduled payment. This will not only help to reduce the amount of interest you’ll pay, but it will also help to reduce your debt-to-income ratio, which affects your credit score.