Using Your Credit Card

Part of my strategy to getting rich quick and young is using credit cards on every last thing I buy. I think this is a strategy that most (if not all capable) people should employ. In fact, my credit card can get the credit (ha, ha.. get it?) for my ability to travel hack my way  to a couple of free trips. If you have the right credit card, you should be using it for every single thing you purchase. Every. Single. Thing.

Here’s why:

1. Save on bank fees

I know you lucky American’s don’t have to pay fees, but here in Canada, we have a different fee structure. If I go over 10 transactions charged to my debit card, I am charged $.10 per transaction. That’s quite a bit, when it starts to add up. I know people that regularly have $20 charged to their banks at the end of the month because they go over their free transaction allotment. Cash will take care of this too, but with the burden of having to carry change around and cash doesn’t carry the rest of the benefits of using a credit card.

2. Track your spending

I used to be a cash only gal (ick, I can’t believe I used the word “gal”), but I’m too lazy to write things down as I purchase them and keeping receipts makes my wallet look like something out of of my worst nightmare, so using my credit card for everything really helps with tracking my expenses.

I check my online banking every day, and it really breaks it down for me. Plus, it’s helpful to be able to just download a spreadsheet of all of my transactions at the end of the month from my online statement and total it up in Excel. It makes the math much easier.

3. Interest

I can hear you all telling me that interest is a BAD thing about credit cards , but hear me out.

If you pay for your $2500 tuition with your credit card, it leaves that $2500 in the bank (assuming you HAD the money to begin with) to gain interest. If you know the date that interest collects on your credit card – it’s every 28 days for mine – just pay it back the day before (make it two days to be safe), and all that money was sitting in your bank collecting interest for you for however long it was between your purchase and your payment date.

If I paid for my $2500 tuition on May 1, and my interest didn’t come out until May 15, then I have half a month to collect interest on my $2500. Say the interest rate is 2% per year,  that’s $4/month in interest. You’d gain $2 off paying with your credit card.

This doesn’t sound like much, but when you charge absolutely everything to your card, it can add up to a tidy little sum at the end of the year. But please make sure to pay back the full amount owing to your card every month. Otherwise you’ll owe interest instead of earn it.

4. Cash is irreplaceable

Unfortunately, if you lose cash, it’s gone. If you lose your credit card, you can cancel it (hopefully ASAP so nobody steals your info!) and order a new one.

5. Rewards points

Rewards points and rebates are actually the most compelling reason to use your card for absolutely everything, though I doubt I have to tell you that. You can swipe your way to free trips, free DSLR cameras, laptops, and vacations. Why not? You are going to be spending the money anyway, you might as well get something from it.

I’ve earned several free flights by using my American Express Airmiles Platinum Credit Card. I was able to earn my entire honeymoon’s worth of hotel stays with my American Express Gold Rewards Card, too. That’s just the tip of the iceberg!

Have I convinced you yet? Of course, if you have a spending problem you should probably step away from the credit card, but for the average person who doesn’t’ carry a balance, this is a great strategy. Especially if you love to travel.