The most important thing for a young man is to establish credit – a reputation and character.
John D. Rockefeller
(I believe John Rockefeller would agree that it is also important for WOMEN to establish those things as well.)
I know credit cards are supposed to equal EVIL, but they really can be great tools – if you know how to use them correctly!
As long as you pay off the full balance every single month, credit card companies won’t charge you anything (unless of course you have a card with an annual fee). This can be a nice way to manage your money.
Credit cards are one of the best ways to track your spending. Log into your account online each week (or you can be super anal and do it daily like me) and track your spending. If you see a purchase that you did not make, call the credit card company immediately.
Many credit cards offer some type of rewards programs. Whether it be cold hard cash or points that can be used towards airline tickets, gift cards, etc. – always use a credit card that gives you something back for using it.
Build your credit history with a credit card. It’s important that you build up the right credit habits to maintain a good credit score. Make small purchases on your credit card each month and pay the balance in full when the bill comes in. When you can manage this, you can start to put larger purchases on your card.
There are lots of other benefits of using credit cards. Most companies offer these:
- Auto Rental Collision Insurance
- Purchase Security and Extended Warranty Protection
- Emergency Travel Assistance
- Delayed & Lost Baggage Assistance
- Travel Medical Insurance
- No Fee Travellers Cheques
- Guaranteed Hotel Reservations
See, credit cards aren’t so bad afterall! The main thing you have to do is PAY YOUR ENTIRE BALANCE EVERY MONTH! If you can handle that, then a credit card may be a good thing for you to use.
Many people say that to avoid debt, you should pay for everything with cash. I have tried this method. Really hard – pinky swear. It just does not work for me. For one thing, I don’t earn any type of reward for paying in cash. The most imporant thing, though, is that when I have cash in my pocket I will SPEND IT ALL. It’s terrible. It’s harder for me to swipe my credit card then to hand over cash. Credit cards work for me. Richard is the same way, so we use our credit cards to pay for almost all of our monthly expenses.
Richard and I both use a TD Rewards Visa (we also have an HBC Mastercard and a PC Mastercard that are only used at HBC/PC stores to earn points at those stores). This card works for us because we get a cash back reward every January. We don’t travel often enough to need airline points. I’d much rather get a nice large sum of money once a year that I can spend on whatever I want, anyway.
