Search the term “credit cards” and you will see whole lot of things on how bad they are and how to avoid debt. I’m here to say that these poor little guys are misunderstood. They are so misused and that is what gives them the bad name. If we all just took care of them the way we should, credit cards can actually be a huge benefit to us.
The reason I’m writing this now is that we are planning a trip to Gulf Shores for which the gas to get down there will be entirely funded by the rewards we earned with our Discover card at no extra cost to us. More on that later, for now, let me clear up some misconceptions.
- Credit Cards are for the rich- False. In fact, I would argue that they are best for those on a tight budget. If you use your card on things that you would buy anyway, like gas and groceries, and pay it off entirely every month, you are not losing any money. They help your budget by giving you credit (hence the name) for using their service if you take advantage of their rewards programs.
- You only have to pay the minimum amount every month- Oh my. This is a really good way to stack up a whole lot of debt that you will regrettably be paying off for a long time. This is what gives credit cards a bad rep. To make credit cards work for you, you have to have a very different mentality than what is the norm. You have to see your credit limit as a number you never want to get near, you have to recognize that everything you charge to the card will be coming out of your -bank account every month, and you have to be organized enough to remember to pay it off before it’s overdue (entirely).
- Credit cards hurt your credit score- We learned this the hard way. Our philosophy was to avoid debt like its the plague, so we didn’t borrow money. Turns out, being responsible and not borrowing money also means you haven’t proven yourself to be faithful to pay a debt back. Thankfully we signed up for a Discover card in time to develop enough of a credit score to open a home loan. Bottom of story is, credit cards, when paid off faithfully, can do great things for your credit score.
- A very important note on your credit score: The credit score gurus don’t like it if you even get close to your credit limit. One rule of thumb is to stay within 50% of your credit limit. So, if your limit is $1,000, don’t spend more than $500, or you’ll hurt your score.
I hope this has cleared up some of those misconceptions that go along with credit cards for you. Don’t be afraid of them, they can actually do some really great things for you if you use them correctly.
Have you been considering getting a credit card, but haven’t because of the above mentioned misconceptions? Are you feeling a little better about that decision? Then click here to apply for a Discover card and earn $50 rewards cash for you and I right off the bat. What would you do with $50? I might put it to our next vacation
Tomorrow I’ll post about how we funded our vacation using credit cards.
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