Credit Cards Can Be Your Friend

I’ve made it very clear throughout my blog that I’m a fan of credit cards. My husband and I put all our purchases on one credit card, with the exception of Costco, where we use AmEx, since it’s the only credit card they take. We earn rewards on our cards, have a clear statement of where all our money goes every month, and can pay for everything with the click of a mouse at the end of the month. We’ve never been burned by credit cards, but that’s because we’ve been very careful with how we use them. During the first year after starting our own business, we barely made enough money to pay our mortgage. Pretty much everything else went on our credit card. For most of 2004, we were not able to pay the balance in full each month. Once we started making enough money to pay more than our mortgage and utilities, we started working in earnest to pay back our debts. We used balance transfer offers twice, taking advantage of zero percent interest for as long as we could. I kept careful track of when those offers expired, and we made sure that we focused on our highest interest debts first. We did pay plenty of interest on credit card debt in 2004 – 2005. But we minimized the damage, and came out the other side with our mortgage as our only debt, which we’re working to pay off as quickly as possible. Without credit cards, we’d have had a much tougher time in those early years of having our business. I know that we could have waited a few years and saved more money before quitting our jobs and starting a new business. But we were miserable at the jobs we had, and getting out of them as fast as possible was a huge priority. I guess that you could say that the interest we paid on credit card debts for those two years was the price we paid for not having to spend those years in jobs we hated. To me, that was worth it, although others might strongly disagree.

Most pf bloggers are squarely in one camp or the other when it comes to credit cards – either love em or hate em. I have no problem with credit cards, but you have to enter into the agreement with an understanding that the credit card company is in business to make a profit, and is far more concerned about their own bottom line than they are about yours. But isn’t this the case with any business? If you don’t trust yourself with credit, probably best to avoid it. But if you know that you’re careful with money, don’t spend beyond your means, and aren’t already in debt, you’ll probably do just fine with a credit card. But how do you choose a card? I got my first credit card when I was in college. I can’t remember how I chose which one I applied for, but I’m pretty sure that I just responded to the first mailing I got from a credit card company once I decided I wanted one. The other option was to sign up on campus and get a free t-shirt or bag of M&Ms… either way, I know it wasn’t a very scientific process. These days, my husband and I have a card that gives us a cash back reward – every time we get 10,000 points, they give us a $100 credit on our statement. For us, that’s much better than shopping through rewards catalogs, because we can spend the $100 on whatever we like – groceries, gas, etc.  If you’re in the market for a credit card, do some shopping around and find the one that will work best for you. Whatever you do, don’t just sign up for one because they’re going to give you a free set of BBQ tools and a t-shirt.