Credit cards are great, if you use them correctly. I use my credit cards for
almost everything. But, I pay them off every month. And, since my main card is
a Discover card, they pay me for using it. You just can't beat
that. However, if you are not paying your credit cards off every month, you're
losing money, probably a lot of money.
Cash Back / Rebate Credit Cards
- Up to 5% Cash Back
Details and more credit
Here are the basic rules for using credit cards.
There are too many cards around lately that do not charge you an annual fee. You
should never have to pay to use a credit card. Before you apply, make sure that
you read the fine print. Some cards applications only say that you don't pay an
annual fee the first year. Make sure that it says there will never
be an annual fee.
If you don't pay your bill on time, the credit card company will charge you a
late fee. These fees are usually very high. My credit cards charge between $20
and $30 if you don't pay at least the minimum by the due date. Also, late
payments will end up on your credit record and negatively impact your credit
score. To make sure you are not charged a late fee, mail your payment in at
least 10 days before the due date. Even better than mailing your payment, most
credit card companies allow you to pay your bill online with no fee. This way
you even save the price of a stamp. You can usually schedule your payment to be
deducted from your bank account whatever day you choose.
This is the key to getting the credit card companies to pay you to use their
card. If you don't pay the bill in full every month, then you
will have to pay finance charges. One month of finance charges can wipe out any
benefit that you might receive from getting cash back. If you only make the
minimum payment each month, it will take approximately 8 years to pay off your
credit card bill, assuming that you don't charge anything else to it.
This is how the truly Frugal manage their credit cards (and basically the rest
of their financial life). If you don't have the money to pay for something,
then you shouldn't charge it. If you need something, you should save up enough
money to pay for it before you buy it. If you save your money,
and put it in an interest bearing account, then you win both ways. You are
getting interest on the money for a month before you have to pay your credit
card bill, and you are going to get cash back from your credit card company on