How many financial advice blogs and books have you read that tell you to cut up your credit cards? If you are in debt and have a spending problem, then this advice may well be right for you. However, for others, it can close off a great option for improving our financial situations.
I am talking about credit card rewards. There are lots of options out there, but the vast majority of rewards boil down into three main categories – cash back, points, and miles. The more you spend, the more rewards you earn. Now, this can obviously be a trap that keeps us in debt as we chase bigger and better rewards, but the truth is that most of us do more than enough ordinary spending to earn something useful.
I use a cash back card, though I used to have a points card. All of my normal spending goes through my card. I use it for everything – groceries, toiletries, bills when I can, and dining out just to name a few categories. These are things I would be buying anyway, so why not earn something for them? For me, the cash back is the best option. I use it to pay down my credit card so I have less to pay off each month. Yes, you should always pay off your credit card in full each month.
If you like to travel, then a miles card could be the way to enable that without endangering your budget. I’m not familiar with how miles cards work, but there are many resources out there on how to get the most from these options. Why spend all your money on travel when you can get at least part of it covered by your previous purchases?
Obviously, credit cards are not the solution to any financial situation, but they can be a tool in your arsenal. Many people don’t like credit cards, which is fine. I don’t like them myself, but I am unwilling to throw a tool away just because I don’t like its design. They aren’t for everyone. You need to make a decision if this tool is right for you. It requires careful maintenance, but if it is right for you then you can put it to work.