Do I sound like Bizarro?
Hi I’m Reasons Money, oh wait… that’s Bizarro!
I know, my title doesn’t make sense on the surface, but hear me out!
It’s true, my credit cards helped me get out of debt quicker than if I hadn’t used them!
First, let me set the background. For the last 12 years, I’ve only owned reward credit cards (Sony,Upromise, GM, Citi, Schwab, etc).
Secondly, I almost never (hard to believe huh) carried credit card debt longer than a month. I like to pay my balance in full each month! The only time that I didn’t pay my credit card balance in full was when I bought a computer with a best buy card that had a 0% interest deal (and even with this card I paid it off early).
I only own reward credit cards, and usually ones with pretty decent paybacks percentages!
So how did (and does) that help me pay off my debt any quicker, you might ask?
Well, first I get a discount on my purchases, typically anywhere from 2 to 5%! If you pay with cash, you will incur that additional cost! This is better than I did in the stock market last year! (Laughing, but really crying inside…). This alone make the reward cards a great deal!
You might not think this make a big difference but it does! Instead of saving that money, we used it to help augment our Christmas presents! We have also used it to rewards ourselves for being so frugally minded. Yes, purchasing goods with credit cards is frugal (there, I said it!)
The amounts saved via reward credit cards is like a forced savings plan.
Now, I’m not really Bizarro, and I know that in many ways having Credit Cards for some is like giving a beer to a recovering alcoholic. But if you have the displine or if you create a budget to control your debt, Reward Credit Cards could be used for good instead of evil (another corny superhero cartoon reference).
Credit card are a lot like guns! Guns don’t kill people, people kill people, same with credit cards! Creadit cards on’t get you in debt! People get themselved in debt!
I know what I typed runs against the grains of popular opinions out there!
What do you tkink?
-D
One Caveat: If you are married, your spouse must be frugal and on-board with paying the credit card in full each month for this to work!!! My wife is and it has worked great!
WOW! And to think I though I was fortunate to use the credit card rewards for things like computers or Christmas gifts… and all the while, you’re looking at buying a quality used car!!!
That would be totally incredible!!!
“Credit Cards are like Guns” haha =) true!
I think credit cards are frugal too and I love using mine.
I pay my credit card off every month too.
I think it’s a great way to track your expenses, AND helpful for tax returns too (in case you get audited or something) because then you’d have a paper trail.
We should form a “I love credit cards and I am frugal” club.
@youngandthrifty
Ahhh, good point about the tracking! It seems like everybody blames the credit cards for all their woes…
I like that idea, maybe we should! There are a lot of great Money Hacks out there too! I remember some bloggers were (and maybe still are) playing with the free money from some of the cards to generate interest out of borrowing with 0% interest on the loan… It was effectively free money 🙂
Good idea about the club! We can Co-sponsor it! Maybe call it “Saving with Credit Cards”? or how about “Winning with Credit Cards”?
In the club we could identify all the way you can take advantage of credit cards instead of the perceived other way around!
Hmmmm… Great idea 🙂
Yeah,,,the key is to have the Discipline to pay off at end of each month..hats off to you and the wife!
.-= Ken´s last blog ..Weekend Edition =-.
@Ken
Discipline is the key! We used the rewards money as a positive by reward ourselves at first, but later after my son was born, we used the money/credits for Gift Cards to use for my son and daughter for Xmas gifts.
@Mrs. Money (and LeanLifeCoach too)
I’ve impressed with the positive feed back I’ve gotten with this post so far! While it worked for me, I thought someone would really disagree with my take on it.
It good to hear I have great company with similar feelings!
Thanks to all of you for your confirming feedback!
It’s great to hear that others see the advantages along with the disadvantages to credit card use!
@Austin
Welcome to my site!
The media paints credit cards like they are the ultimate evil, but for me, they really worked to my advantage! Credit cards are just a tool, nothing more or nothing less. You have to know how to use the tool to get it to work best for you!
I actually looked forwards to using my credit card for purchase because I knew I was getting a discount!
I love rewards credit cards!
I calculated my usage this past year (2011) and so far I have saved an average of over 3% back on every purchase by maximizing which card to use in which situation.