Should You Own Credit Cards?
Not everyone should have a credit card. In fact, for many they are a dangerous thing that allow you to spend way too much, way too easily. If that’s you, you shouldn’t own a credit card. If you are tempted to spend money you don’t have, credit cards are a bad idea. Similarly, if you have unpaid credit card debt, get rid of that thing as soon as possible. Cut up your credit cards and never have one again. You need to pay off all your debt on these cards as quickly as possible. The banks are killing you on this. Make sacrifices, sell some stuff, refinance the debt into your mortgage or as a one off transfer the debt to a 0% balance transfer card. Just pay it off and kiss goodbye to the plastic.
Some Reasons To Own Credit Cards
That said, I own rewards credit cards. For me credit cards do a few things that make sense.
- The bank pays my bills for me and I don’t have to pay it back for up to 55days. I’m happy to earn interest on that while the bank pays it for me.
- I like earning a few frequent flyer points and turning those rewards into free travel. I have taken lots of free trips with these points. That’s free travel and sounds good to me.
- Some cards come with free international transaction fees that save when making international purchases or when travelling.
- You often need a credit or debit card for online purchases. Go debit if credit cards are not for you.
- You get some purchase insurance or travel insurance thrown in. This is an extra perk, I wouldn’t look for it, but it has come in handy once or twice.
- I have easy access to most of my transactions to keep an accurate budget.
For these reasons, rewards credit cards make sense for me.
Credit Card Rules
However, I’ve got a few rules that you must keep to make having credit cards worthwhile. If you can’t keep these rules, you shouldn’t have one.
- You must pay off 100% of the balance every month to not ever incur any interest payments.
- Never take a cash advance for the same reason as above.
- Never buy anything you wouldn’t have anyway.
- Never ever pay an annual fee, unless that fee is waived or there is a cash equivalent given.
- Never change your buying habits to earn points or the like, they’re not that valuable.
- Never use your card if a surcharge for using it is applied.
- If possible earn some points or get some rewards with your card.
With those criteria in mind you should be able to find the right credit card if credit cards are for you.