“Cut Up Your Credit Cards, Then Put ‘Em to Work” What? Does that even make sense? Well, at first look, not much. What I’d like to talk about in the next few paragraphs is a brief overview of the role that credit cards should play in your life, depending where you are at financially.
If you are still trying to solve your credit card debt, then the first part of the title applies. Cut ‘em up. Actually, cut your credit card use down to the bare bones minimum. By that, I mean like, groceries. I will put it to you in as simple of terms as possible. And this is the only rule you’ll ever need to get out/stay out of credit card debt.
“If you can’t afford to pay it off by the end of the month, then you can’t afford it.”
Plain and simple. So, if you’re still carrying balances on your credit cards, this needs to be your new strategy. Paying down your principle is for another discussion—to get moving in the right direction, you need to cut out the majority of your credit card use.
So, let’s fast forward to somewhere and sometime in the future. Let’s say its six months from now. And now, let’s say that you are out of credit card debt. Or maybe you’re already there. Well, now it’s time to do a complete 360. I want you to go from not using your credit cards at all to using them as much as possible! Yep, you heard it right. It’s exactly what I did.
Let me back up. First, you cannot forget the mantra that got you to this point. You still cannot use your credit cards unless you can afford to pay them off by the end of the month. Remaining disciplined in this area is a must. If you can handle that, put your credit card(s) to work for you!
Find the best one out there with the highest cash back option (I think it’s difficult to find one over 1%, but it’s always worth a look – **Note from Joel** – One cash back credit card that I recommend checking out and that I use personally that gets at least 1% cash back and up to 3% cash back is the American Express TrueEarnings Card). Then, use it as much as you can. Use it at the grocery store, use it for gas, use it for everything. You can even contact your utility companies to see if they offer an auto bill pay service. If they do (and there are no fees involved) sign up to have your utilities paid by your credit card. Then, watch the savings roll in on a monthly basis. I currently get at least; I mean at least $20 back monthly from mine.
For the most part, I would stay away from the cards without the cash back option. The ones that offer nothing more than “gifts” or prizes or whatever you want to call them are of no use to me personally. I say, “Show me the money.” Of course, if you happen to travel all of the time, maybe find one out there with a good travel rewards program. If you stay in hotels a lot, there is probably one out there designed for that as well. I would just make sure, however, that the savings that they offer you are equal to if not more than what a 1% cash back option card would give you.
I went through this process myself, exactly as I have outlined for you here. Credit cards, depending on how you use them and how you think about them, can be your worst enemy but with a little moderation and planning, they can also be money makers for you as well.
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