Cash Back Versus Point Credit Cards
Credit cards are a necessary evil. You need them to help build your credit but if you don’t control yourself then you will end up in a heap of trouble. Having credit is important unless you have significant amounts of cash that you can use. If you are not cash rich then you must have credit so that you will be able to get an apartment, mortgage, et cetera. Remember that credit cards aren’t free money; they are a super high-interest loan that you need to pay back and then some.
Therefore, no matter what credit card you choose, make sure you pay it off every month. That being said, when it comes to credit cards, there are so many different options. You can get cash back, miles, reward points, and more. With those different options, it may be tough for you to make a choice. However, the thing to know is that cash back is the way to go.
Cash back is a great thing for credit cards and if you have a credit card it had better be a cash back credit card. The reason is because cash is what you need. You don’t need points, or products, or miles because all of those things can be purchased with cash. Sure, you can get cards with points and then redeem those points for cash. You could also redeem the points for products and then sell the products, but that is a lot of extra nonsense. Keep it simple and find a card that offers you the ability to receive a statement credit or that will cut you a check. You want cold hard cash.
When looking for the perfect cash back credit card, make sure you find one that is free. Yes, free. If you have to pay any form of membership then it isn’t worth it. I don’t care how much cash back they are giving you. It isn’t going to be enough to cover your membership costs. Generally, a good cash back credit card will give you 1 to 1.5% cash back on all purchases. Some cards may even do quarterly promotions where they give you 5% cash back on purchases within certain categories. Again, keeping track of that may become more of a hassle than it’s worth since you may have to enroll in the promotion every quarter. Remember – keep it simple.
Once you have your card, start using it for as many purchases as you feel comfortable with. Set up your utilities on auto payment; use it for gas, groceries, et cetera. Then, this is important, pay off the balance every month. I’m going to say that again, pay off the balance of your credit card every month. Got it? That means paying the entire thing at the end of each month so that your balance goes down to ZERO.
So, if you don’t have the money in your bank account, don’t spend it on the credit card. You are essentially going to be using your credit card like a debit card instead of a loan. You are going to watch the balance and make sure you never go over your budget. Essentially, the only reason you are using the card is to get some cash back, and for an additional layer of security to protect your debit card. Therefore, pay it off every month. If you use your credit card like a debit card then you will save tons of money on potential interest rates, you will earn cash back, and you will be in control of your finances.
Now for the closing point that may make you forgo this cash back nonsense entirely and simply set up your bills to pay from your bank account and only use your debit card. Ready? Here it is:
There are a lot of millionaires out there in the world. Most of them became millionaires by taking financial risks and calculating those risks wisely. All of them maintained control of their money and none of them made their millions through cash back rewards. Therefore, whether or not you want to engage in cash back credit cards, or simply use your debit card is up to you.
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