Using Credit Cards Wisely
I believe the downside is the very negative effect on one’s credit record and score due to a relative high average monthly balance on credit cards. Its about personal priorities.
I have recently discovered a benefit from using my credit cards. We all know that some credit cards offer cash back rewards for purchases. We also know that they give around a 25-day grace period for purchases before interest begins to accure. I have been using these two facts to my advantage. I charge all my gas, grocery, and even some bills to my credit card that offers 1-5% cash back depending on the purchase type. Therefore, all my everyday expenses automatically become slightly cheaper, resulting in stretching my money further. Another way this results in a little extra money is that the temporary “float” of the money I would have used toward these expenses is put into an interest-bearing account. In effect, delaying this month’s expenses until next month. This constant “float” allows a month’s worth of expense money to accure interest (currently 3%).
Now, I want to give two important caveats here. First, I never carry a balance past the grace period on any of my credit cards. If you do not have this luxury to pay your full balance every month then this is not for you. Secondly, if you are going to pay for such items as your utility, cell phone, or cable bills make sure that none of them charge a service fee or surcharge to use your credit card.
I now prefer to pay everything I can on credit and pay off the balance the following month. I was wondering if anyone else does this as well or if they know of a better way to leverage everyday expense money.