Recently I have talked to people who use credit cards for the cash rewards. Generally when you do this you charge all of your living expenses on the card (groceries, gas, clothing and so on), and then you pay off the balance at the end of the month. This can be beneficial if you are responsible enough to pay off your balance in full at the end of every month. If you do this you need to be extremely disciplined and follow these guidelines.
1) There are so many credit cards available with cash back rewards that there is no reason to pay a fee for a credit card. In addition, you should make sure that you have a reasonable interest rate, just in case something happens and you are not able to pay off in full one month.
2) The next thing to do is to create a way to track what you spend on your credit card each month. You can use a check register, or a computer software program. As you track your spending, be sure to track it in your budget as well. If you make sure you do not overspend in each area, you are more likely to stay on budget.
3) Pay your bill online. This will help you to avoid late charges and higher interest rates. You will not need to worry about a payment getting lost in the mail. It is easy to pay your bills online and can save you time as well.
4) Find the card that best fits your spending habits. Some cards offer higher rewards on groceries or gas. Others offer specific rewards such as travel points. Cash back is likely the best option, since you can just take that money and apply it to where you want. You will not be locked into a specific area.
5) Pay your bill on time and in full every month. Credit cards do not offer rewards so that they can pay you money. They offer rewards so that they can make money off of you on your interest charges and late fees. Do not cost yourself valuable money.
Related Articles:
Choosing the Right Credit Card
Five Tips to Help You Stop Using the Credit Cards
How Important Is My Credit Score?