Stop! Before You Cut Up Your Credit Card
Caryl Rosenthal
May 31, 2007
Folks, there is a lot more to managing credit cards than charging and paying. If used properly, a credit card can make you a lot of money and not cost you a thing.
Firstly, you should make sure that you have a credit card that gives reward points of some kind. If you travel, make sure you get airline miles because you may never have to pay for another airline ticket. If the credit card offers a discount on purchases, you can have an automatic deduct of up to five percent of what you spent kicked back on your bill.
Every bill you have to pay each month, the ones you pay with a check or debit card, put on a credit card with a zero balance. Then, pay the credit card bill with the cash you would have sent directly friom your checking account. To avoid interest charges, you have to ensure the bill is paid before the 30 day cycle lapses. Even if your credit card has a 25% interest rate - who cares? You never have to pay anything, you get the brownie points with money you were prepared to pay anyway, your credit score goes through the roof, and the credit card company even documents your expenses for you.
The only way this works, though, is if you just charge the things you have money for anyway. Of course, you can run up charges and get the points, but if you leave an unpaid balance on the account, you will be charged interest, which defeats the whole purpose.
There is one exception, though. Unless you have a credit card with a low interest rate and are faced with an extra-ordinary expense then, as long as you pay more than the minimum every month, it might be the answer to a sticky spot for you. Remember, though, that the goal is a zero balance on a month to month basis. This should be a short-term solution.
Take advantage of double and triple air mile promotions. Credit card companies often make deals with oil companies, hotels, retail outlets and others -- it pays to keep your eyes peeled.
By the way, you should be asking for an interest reduction from the credit card company anyway. If they won't do it this time, ask again next month, because if you follow this plan, they will lower it, and on a regular basis. Try it!
Once you get used to it, there isn't even a need for a discussion on the point. I know a woman who even pays her mortgage on a credit card every month, and she earns fourteen (14!) airline tickets every year for the bills she pays every month anyway, and it costs her nothing. Guess where she spends her time?
Firstly, you should make sure that you have a credit card that gives reward points of some kind. If you travel, make sure you get airline miles because you may never have to pay for another airline ticket. If the credit card offers a discount on purchases, you can have an automatic deduct of up to five percent of what you spent kicked back on your bill.
Every bill you have to pay each month, the ones you pay with a check or debit card, put on a credit card with a zero balance. Then, pay the credit card bill with the cash you would have sent directly friom your checking account. To avoid interest charges, you have to ensure the bill is paid before the 30 day cycle lapses. Even if your credit card has a 25% interest rate - who cares? You never have to pay anything, you get the brownie points with money you were prepared to pay anyway, your credit score goes through the roof, and the credit card company even documents your expenses for you.
The only way this works, though, is if you just charge the things you have money for anyway. Of course, you can run up charges and get the points, but if you leave an unpaid balance on the account, you will be charged interest, which defeats the whole purpose.
There is one exception, though. Unless you have a credit card with a low interest rate and are faced with an extra-ordinary expense then, as long as you pay more than the minimum every month, it might be the answer to a sticky spot for you. Remember, though, that the goal is a zero balance on a month to month basis. This should be a short-term solution.
Take advantage of double and triple air mile promotions. Credit card companies often make deals with oil companies, hotels, retail outlets and others -- it pays to keep your eyes peeled.
By the way, you should be asking for an interest reduction from the credit card company anyway. If they won't do it this time, ask again next month, because if you follow this plan, they will lower it, and on a regular basis. Try it!
Once you get used to it, there isn't even a need for a discussion on the point. I know a woman who even pays her mortgage on a credit card every month, and she earns fourteen (14!) airline tickets every year for the bills she pays every month anyway, and it costs her nothing. Guess where she spends her time?
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