Credit cards get a bad rap. After all, they can cause everything from bad credit scores to bankruptcy. According to the latest data the average household carries over $15,000 in credit card debt. With the average interest rate of credit cards being 13%, that’s a lot of money being spent on interest charges. But when utilized effectively, credit cards can be used to your advantage.
To take advantage of credit cards, you’ll need two things, a rewards credit card and a lot of self control. Here’s how I effectively use my credit cards.
I Take Advantage Of Them
Credit cards have been taking advantage of consumers for a long time. Now it’s time to turn the tables. Sign up for a rewards credit card and begin reaping the rewards you are entitled to.
I have a Capital One rewards card which gives me 1% on all my purchases. That wasn’t good enough for me so I signed up for an Amazon.com card which offers 3% on Amazon purchases, 2% on gas, restaurants, pharmacies and office department stores then 1% on everything else. Another good card is the Chase Freedom card, which offers 5% on different categories each quarter.
Don’t feel too bad about the credit card companies not getting any interest from you. They are already making money by charging businesses for the credit card transaction.
If the credit card companies are making more than 2% on every transaction, why not take at least 1% of it. After all, without you the credit card wouldn’t make a dime.
I Charge Everything On My Credit Card
Are you extremely responsible? Do you have great credit? If so, you can be a candidate for putting every single purchase on a credit card. By doing this you will maximize your rewards potential. Just be sure to pay off the card in full every month to avoid paying any interest.
Making all your purchases on your credit card also helps you easily create a budget. At the end of each month I can clearly see how much I’ve spent on my monthly expenses. My credit card separates each charge into groups, so I can see how much I’ve spent on gas, groceries, clothing, utilities and entertainment.
I Dine On My Rewards
You can use your rewards however you like. Some opt for a statement credit, a check or PayPal credit. But you rarely get the best bang for your buck using those options.
It costs far less in points to redeem your rewards for a gift card. Now you could just get a Walmart gift card and spend your rewards on necessities like groceries. But that’s boring.
I choose to spend my rewards points at restaurants. I can never really justify spending my own hard earned money on a $15 meal. But when the meal is on someone else’s dime, it just seems to taste better.
Do you have a rewards credit card? What have you been able to redeem with it?