Ready to use credit cards in the WRONG way?
You're in good company.
Here are 7 lies I've heard about credit cards that will prepare you for using credit the RIGHT way.
Credit cards are such a polarizing topic. You'll hear one end of the spectrum say credit cards the best use the points use the points get the points get the cash back and then it have the other end of the spectrum say there's a devil don't use them throw them out cut them out never apply. However, is there somewhere in the middle?
Well, here are seven lives that. Actual people have told me about a credit cards that I want you to prove the truth. So let's find some truth and let's find it now. All right, the first school of thought credit cards are bet inherently bad and they're not inherently good nor bad. Let me tell you why they can be used like sometimes I apply for a credit card recently it was.
Spend a thousand dollars within three months which is quite easy and get $150 back in statement credit. So I thought to myself if I just switch some recurring bills from a normal credit card onto this new one for three months out of a hundred bucks. So that's where this camp they're good now they can be a super big temptation.
If you don't have a lockdown budget at zero based budget, which means every dollar has every Soldier every dollar has a place to go and defend or attack depending on what's happening. If you don't feel very comfortable with discipline in regards to money credit cards may not be a good idea. Not to say they're bad because they're not we just talked about example of there.
However, maybe for your situation right now having a credit card may not be in your best interest. However, the only way you can really overcome that is to become disciplined and that doesn't just happen from praying to the holy Lord or you know, it being bestowed upon you. It happens from putting yourself in uncomfortable situations to grow.
So maybe it's applying for credit card getting one with a very small limit and using it once a month just to show yourself that you can have that discipline. Maybe it's not. Maybe it's being a authorized user on someone's card and making sure you they hold you accountable. You got to put systems in place to where you're going to succeed.
You don't want to put system in systems in place that are going to make you fail. So put a system in place whatever and be a physical person a reminder that's going to remind you to be disciplined. But that accountability you will become disciplined and I will be very happy for you and it cards have no benefits.
Okay, well. Huh? Let's break that down. No benefit. Well, what do you mean by benefits? Exactly. Although I'll be a good girl would be a good starting Port now. There's a couple benefits summer travel points. You can redeem when you're traveling places or flying different airlines some our cash back summer points.
Some are gift cards. There's a variety of different ways. I'm not going to go into all of them for for the sake of this breve, but I have a video. However, there are definitely some benefits. For instance. My Internet bill every single month is about I don't know between eighty and a hundred dollars.
I forgot my forget exact. Let's say it's $100 $100 a month so I can pay with credit card with no penalty with no extra fee and I receive 1.5% cash back. So yeah, it's only a dollar fifty but do it for five years. It's actually a decent amount of money another benefit. That's not really Financial per se I was in Mexico.
quite a few years ago and. I bought some Levi's jeans not because I wanted to buy them but because I arrived in Mexico with all my outfits and I only brought a pair of basketball shorts a pair of shorts to sleep in dummy. So I went to the Levi's Outlet in Mexico thinking. Oh, this is probably gonna be nice.
I walk in and buy a couple and realize after I do the conversion, which I should have done before being a silly silly boy. I just spent like $60 in a pair of time pair of each pair of jeans about $120. I have to myself. 60 bucks for a pair of jeans which may not seem like a lot. However, I already have seven or eight pairs at home.
It is a lot of money. So I thought to myself I'll just take it back and deal with wearing shorts every single day. I go back to the store and communicate in Spanish that I am want to take them back. I just bought them yesterday. It's not gonna work out. They then tell me. Oh, you can only exchange you cannot return for money.
I thought to myself that's weird weird. So it's this American Express card and I look into the benefits thinking there's got to be some recourse to this because this is ridiculous. I bought them one day ago, long story short. They have a. Return policy return program so you file climb through American Express.
And what do we tell them? I bought these dreams. Here's the receipt. They won't take them back. Within three days. Guess what the money's back in my account meaning the re they refunded the money and and and here's the benefit of all I get to keep the jeans and I still have them so always double check.
I've heard the same thing work on telephones. So if you buy a $500 phone, let's say 500 you buy an either or foam for instance and you put it all in one card and you break the British out of the screen or break them some nature. They'll actually reimburse them buy you a new phone. That's pretty sweet.
So look into those benefits because those benefits are in my opinion even greater than the cash back benefits making the minimum payment helps your credit score. Yeah, I guess it does to an extent because your utilization is being paid down. However, that's that's a very one-dimensional way of looking at it.
Let's bring a panorama. Keeping your utilization. Which means if you have a thousand dollar credit limit you want to keep it $300 or below all the time. One-third approximately thirty percent and the reason you do that is because again that shows responsibility that you're not using everything they're giving you.
You're using a decent amount. So you're being responsible and you're paying it off and at different segments different times. And if you have to make that under thirty percent each month paid off twice a month paid off once a week. I do it once a month personally because everything is on auto pay and I really don't feel like going through all those credit cards and making multiple payments, but I always stay under the 30 percent threshold and that's really important.
Closing accounts, I'm not using will help my credit wrong wrong just completely wrong completely wrong credit history is a factor when it comes comes to your credit score comes to everything. You don't want to open up a credit card or credit account of some nature and close it keep them open.
There's unless they have annual fee. Then I would recommend closing them. If you don't use the card, however, I have a credit card since I was 18 years old that I use probably once a year. However, I can see all that history that has accumulated over these years. It's good paid history that is invaluable.
That is something very very important that if you close that account for me, it would be seven years of credit history gone in the blink of an eye and I don't want that. The credit history is very important and closing accounts. Actually may hurt your score using a credit card. Makes me spend less cash.
I've heard this from even Finance bloggers and it's just so.
makes me sick makes you wanna puke honestly. Maybe though you may be the anomaly, so you maybe the small percentage who can have that? Discipline. However, here's the here's a transaction when you're buying something so.
alright, so we take the dollar we go by. I don't know that stick on what can buy a daughter to take a dollar. So you give the dollar to the cashier and they give you back change which is less than a dollar right? Our brain wiry says that dollar purchase item less money that sort of brain says.
Alright, let's use the other example now you give a credit card in the cork. What do they give you back? The credit card our brain does not see that as an actual transaction. We receive the same credit card back we would take the item and we go so in reality was free, right? No, no, absolutely not.
However. We don't make the connection in our brain that that actually happened. We are Wes end than that. So if you think you spend cash quicker, I would encourage you to track everything and do it for one month cash one month card, and if you can spend less on your card props to you. You've beat the game the more money I charge on my card the higher my score goes.
Oh my goodness. This is why Financial education is so important so important for young people and old people like it's just it's so Preposterous the things I hear sometimes no, no, Thirty percent threshold utilization use that rule and don't go higher. That's what's going to help pay on time. Keep your account open.
Don't open to don't open to many comes to fast and. I feel like I've heard it all I have heard it all my goodness rich people never use credit cards really so when their assistant is booking them a flight across the the the USA do they pay in cash? No, no, my philosophy is this if things can be paid in cash by paying cash if things like my internet for instance can't be paid in cash and I use a credit card.
I don't think about it. I just do it spending energy and stressing about whether you're going to use cash or a credit card is a bad use of energy as this one question can be paid in cash if the answer is yes use the cash. And be done with it. However, if it doesn't use the credit card and be done with it don't stress too hard about it.
And also when using credit cards for business purposes and makes tax time a hell of a lot easier because you actually have a record of everything. And sometimes cash purchases. It's hard to remember the exact amount so credit card is useful in there. Those are the lies I've heard personally. I'm sure there's so many more.
What have you guys heard about lies about credit cards. There are either the devil or the greatest thing ever, right or they somewhere in the middle. I think there's somewhere in the middle. They can be used for good things and can be used for Preposterous very destructive things, but comment below.
I want to hear what you guys have heard lies and truths about using credit cards that will see you guys soon, and make sure to like And subscribe. Bye. Bye.