Maybe it’s the years of sales training instilled in me, or maybe it’s actually a smart idea. Either way, I make all my purchases with a credit card and I’m here to tell you that you should too. Credit cards have gotten such a bad rep over the last couple of years. You constantly read articles about how the credit card companies are out to get you, charging high interest and ridiculous fees; even how they negatively affect your credit score. So before you count me out and skip this post, let me tell give you my sales pitch.
|If you can earn money by spending money -- why not?|
· Do you know what happens to your card when the waiter takes it after you pay your dinner bill? We assume he takes it to the register, swipes it and brings it right back; but what if he doesn’t? What if he takes it around the corner, out of sight and writes down your card number? He goes home and goes on an online shopping spree. If you gave him your debit card, that money he spends comes out of your checking account. This could be your car payment or worse, your mortgage. Yes, you report it to your bank and Visa protects you and yes, you will get your money back, but did you know it could be 7-10 business days before you have that money back into your account and that by law it could be up to 45 days? Do you think your mortgage lender is going to care that your payment is late because you were a fraud victim? It’s harsh, but no, they don’t. If you’d paid with a credit card, the money Mr. Steals-A-Lot spends doesn’t affect the money you need for your bills.
· Have you ever rented a car or stayed in a hotel with a debit card on file as security? They put a preauthorization hold on your account. This could be $100. This could be the full amount of your bill or estimated expenses. Again, this is money out of your checking account! Having a credit card on file could free up that money.
· Having one credit card on your credit report will NOT hurt you. (Having a credit card for every department store in the city plus high balances on five more cards with a few late payments over the years however will. Know the difference.) Your credit report is made up of three sections, installment loans, revolving debt, and mortgages. The revolving debt is weighted the least. If you abuse these accounts than yes, they will hurt you. If you have too many of these accounts, than yes, they will hurt you. But if you use a credit card responsibly and keep it for emergencies or every day purchases, it will not hurt you.
· Ready for the best part? You can MAKE MONEY off of using a credit card. I personally use a card that offers 1% cash back with every single purchase, no limits, and no catch. I’m also enrolled in other programs through the bank that offers the card to get a bonus on that 1% so I’m getting 1.5% and the rewards I earn are automatically deposited into my savings account every month. On average, I get a $20 deposit each month. That’s $240 a year for doing nothing more than using this credit card instead of a debit card.
· I know, you’re already thinking the interest or fees I’m paying make that $240 not worth it, right? Guess what? I pay nothing! There is no annual fee on the card. And I pay my statement in full every month to avoid interest charges. It’s not like I’m borrowing money I don’t have. I only purchase things that I have the money for anyway: my groceries, my gas, household items, etc.
· What about cash? A lot of people use a debit card mutually as their ATM card to make cash withdrawals or get cash back at the store. To solve this issue, we got standard ATM cards (to be used exclusively with a PIN number). We only use cash when there is no other option. We’re getting rewards, why not?
I was taught to sell credit cards for years and I never bought into it but once I truly gave it a shot, all of the information really made more sense. My advice? Head to your bank and see what your options are.