The Rewards of Responsible Credit Card Use

By Mike Peterson
In October 27, 2015

I spend a lot of time on this blog discussing the negative side of credit cards because, well, used irresponsibly, there is the potential for a lot of negative consequences.  For example, if you treat your credit card as a secondary source of income, or when you carry a balance month to month and allow interest to pile up, you run the risk of serious, costly long-term debt problems.

As someone who makes a living offering debt advice and credit counseling, I know firsthand just how easy it is to get caught in an endless cycle of high-interest credit card debt. When credit cards get out of control, you pay the price.

But that’s only one side of the story:  If you know how to use credit cards responsibly, they can be quite useful.  Of course, the key word is “responsibly” – which means not overspending, and paying your card off in full every month.

In fact, if you use credit cards the right way – and choose your cards carefully based on your lifestyle – your credit cards can actually help you save time and money.

Here are a few ways you can save:

  • Cash-back rewards.  The details of these cards can vary a bit, depending on your lender:  Some cards offer one percent back and others offer five percent.  Some give higher rewards for shopping at certain stores.  Some rewards programs give you instant access to your cash and others award it once a year in a lump sum.  But nearly all cash-back programs let you turn your cash into an account credit, which is like getting a small discount on purchases you’d make anyway, like groceries or gas.
  • Airline rewards.  These programs work just like their cash-back counterparts, except in this case you earn a certain amount of air miles or reward points for every dollar you spend.  You can apply these reward points to the purchase of airline tickets, which is great if you’re a frequent flier.

One thing to remember, though:  Most of these programs have a set of policies and restrictions on how and when you can redeem your miles, so be sure to do your homework before you decide an airline miles card is right for you.

  • Automatic bill pay.  Okay, so this one won’t exactly save you money, but it will save you time – and it will guarantee that you never have to worry about due dates, late fees, or sending checks via snail mail.  Many service providers, from cell phones to cable TV to local utilities, allow you to put a credit card on file for automatic payments.

Plus, if you’re enrolled in a rewards program like the ones mentioned above, you can earn a little money back when you pay your bills.

  • Discounts on big-ticket items.  I’ll start by saying this isn’t something you should do often (I’m talking no more than once a year or so), but in some cases it may pay to open a store card to get a 15 or 20 percent discount on a big-ticket item – think major appliances, furniture, mattresses, and the like.

This strategy is only advisable under certain conditions, though:  First, the item should be something that you already intend to purchase – a “need” rather than a “want.”  Second, you should already have the cash in hand to pay for the item – that way, you can pay off your entire balance the minute you open the new card.  Third, you should really only do this if it’s been a while since you opened a new account (too many new lines of credit at a time can ding your credit score).

  • Balance transfers.  If you’re currently trying to pay down a high credit card balance, you may want to consider a balance transfer.  If you move your balance to a card with a super-low (or even zero percent) introductory interest rate, more of your money will go toward paying down your principal balance.

But before you jump into a transfer, remember that most balance transfer offers come with fees – so make sure you factor that in to your decision.  Another thing to remember:  That low intro rate is temporary, so a balance transfer will only benefit you if you can pay your entire balance during the introductory period before your rates go up again. And remember that this will only work if you avoid making additional purchases with your card.

For a more in-depth discussion of balance transfers, check out this post or this one.

See what I mean?  There are a lot of great payoffs that come with responsible credit card use.  So if you’re sure that you can keep your spending under control, you can make your credit cards work in your favor – and save time and money in the process!

Need more advice about debt, budgeting, or responsible credit card use?  We’re here for you. Contact the Debt Guru team today for a free debt consultation.

Mike is the author of “Reality Millionaire: Proven Tips to Retire Rich” and he has been published in a variety of local and national publications including Entrepreneur Magazine, Deseret Morning News, LDS Living Magazine, and Physicians Money Digest. He holds a B.S. in business administration from the University of Phoenix.

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