As a personal finance blogger I spend a lot of time telling people to avoid debt, try not to overspend, and to set a budget and stick to it. And more often than not I hear about readers issues with credit card debt, so naturally my advice is to cut the up the plastic and stick to a cash only lifestyle. I don’t like to villify credit cards, they can actually be a great thing if used properly. The reason why you tend to hear advice about avoiding credit cards is because too many people simply don’t have the self discipline to use one. But for the purpose of this article I want to tell you some of the positives of credit cards, and how if used correctly, they can actually benefit your life!
Credit card rewards are just about the greatest thing I can think of! The credit card companies give you rewards for buying stuff. The rewards can be good for travel incentives, gift cards, cash bonuses, and various other items. Now the only stipulation here is that you shouldn’t run out to buy more stuff just for these reward points. In actuality, the rewards tend to come out to about 1% of your total purchases. It’s just a nice added bonus for items that you would’ve bought anyways. For example I use my AMEX card for all of my grocery shopping, any vacations I take, and of course on gas. Over a year the reward points really can rack up.
Budgeting is the cornerstone of personal finance, but it’s not always so easily done. Keeping tracking of spending can be quite difficult. It’s hard to keep track of how much you are actually spending, consider all those tiny expenses like a cup of coffee, a newspaper, or buying lunch at work. Believe it or not, credit cards can be great for helping you budget your money. The more often you use your credit card the more of those expenses you incur can be tracked easily and electronically. Whenever I want to track how much I’m spending, and what I am spending money on, I simply log into my credit cards online portal and run a spending report. I can do this by year, month, or a custom date range of my choice. It helps me figure out where I’m spending too much money, where I’m maximizing my rewards, and to give me a good baseline for my budget by category.