In this article we will cover what you should and when you should not use your credit card.
Credit cards can be great, offer tons of benefits, make great short-term loans, and help you track your spending.
They can also be your credit’s worst enemy. Late payments, overspending and getting into debt can damage your credit.
What to Buy With a Credit Card – The Truth
The truth about credit cards lies somewhere between these two extremes. As long as you manage them well, they are worth it. But if you don’t pay your bill in full at the end of the month, you’ll end up paying a lot of interest on the balance, usually around 14 percent.
This is known as the annual percentage rate or APR. Credit card companies also charge a hefty fee every time you miss a payment – usually around $35. It’s also easy to overuse credit cards and find yourself in debt, as have many US credit card users.
This is not to intimidate you into using a credit card. In fact, instead of protecting by avoiding credit cards altogether, I want you to commit crimes by using credit cards responsibly and getting as much profit as possible.
When I was traveling with my fiancé to see my family in Dubai, I surprised her with a three-night stay at a desert resort that could only be described as 7-star . We had a private villa in traditional Bedouin style overlooking the Dubai desert with a private pool, and all meals were provided at the resort. The whole experience would easily cost $2,000-plus a night, but I did the whole thing for free with points.
—Nathan Lachenmeyer, 29
I recently booked 2 round-trip tickets from San Francisco to Italy for a 2 week vacation this fall. Flights were completely free with credit card points!
-Jane Phillips, 30
Over the past year I’ve moved business class to Spain and stayed in luxury hotels for a week, flew round-trip business class to Thailand with my girlfriend, and took my mother to Germany for my father’s 80th birthday. Took me to business class. I’m about to cash out Miles to go to Budapest next spring!
—Jordan Petit, 27 Most People Are Playing the Wrong Game
I have spoken to literally thousands of people who are in debt. Some of them have faced difficult situations- unforeseen illnesses, elderly parents who need help, sudden expenses. But, clearly, some of them are playing the game the wrong way. He never spent a weekend reading a book on personal finance. They don’t even know how much they owe! Instead of working aggressively to win the debt game, they complain. It’s like watching a four-year-old try to play Monopoly, then realizing they can’t understand the rules (which they’ve never read), getting angry, and flipping the board. I’ll show you how to win.
When it comes to student loans and credit cards, I aim for you to stop playing defense. I’m going to show you how to play offense instead. For student loans, have an aggressive plan and reduce the amount of interest you pay. For credit cards, I squeeze every single benefit out of them. Basically I want the credit card companies to hate you, because they hate me.
The best part is how quickly your financial life can change once you switch from playing defense to taking offense with your money.
In the three-and-a-half years since I read the book, I paid off $14,000 in credit card debt and $8,000 in student loan debt.
—Ryan Haley, 27
In the past year since I started this book, I’ve opened a 401(k) and a Roth IRA, understand how they work, and have funded $7,200 for my retirement. I also opened 2 credit cards to increase my usage and boost my credit score and I am 100% a deadbeat customer who pays in full every month.
-Jeff Collins, 35
I learned how to automate my credit card payments, set flexible spending, and start investing in index funds. Today I have accumulated over $40,000 in my “net worth” which is less than 2 years out of school. Thanks for the advice!
—Emily Bauman, 24