Credit Cards Can Be A Good Thing
Credit cards are often cited as being one of the great evils to your personal finance. This is for a good reason. For most people, they encourage you to purchase something now when you do not have the money and pay it off with interest over time. The unfortunate thing with credit cards is that the interest rate is quite high and 99% of the purchases are for items that will depreciate.
To get any benefit out of a credit card, you need to NEVER CARRY A BALANCE. Interest payments will kill you and outweight any financial perk the card has.
If you have control over spending habits, credit cards can be a great tool and even provide you with a few extra benefits.
- You do not need to carry as much cash and you do not have to write cheques (which are accepted in fewer places and can cost you).
- It is an easy organizational tool when most of your purchases are on one or two statements. It makes it very easy to see where your money is going and how often.
- The card's reward programs. These can save you money occasionally and give you a kind of "rebate" that you can use towards other items.
Reward Programs
This are a big market nowadays. Visa offers rental car insurance just by charging the booking to your visa card. When Canada 3000, an airline in Canada, went bankrupt a few years ago, Visa stepped up and reimbursed those individuals who had booked their travel on their Visa.
If you want to see some other articles comparing cards, then check out some of the following:
- Aeroplan Versus Air Miles - Comparing Them
- Collecting Air Miles and Their Value
- Collecting Aeroplan Points and Their Value
- Scotia Bank No Fee Money Back Visa Card Review
Even bigger are the many different reward systems on a credit card. If you consistently pay off your credit or you do not have a credit card, but think you can control yourself to pay it off regularly, then a rewards program may be right for you.
Start out with the most basic card being offered. There are Aeroplan, Air Miles, RBC points, and a variety of other programs. Basically, they work by giving you "points" every time you charge a certain amount of money to their card. Their hope is that you will not pay it off and they can charge interest on this "loaned" money. It is a huge industry.
The points you earn can be used for travel, merchandise, gift certificates, entertainment options, rental cars, hotels, and almost anything you can think of.
Let's put it this way: This is a free rebate program. Almost like insurance, where most of the people (paying interest on their credit card) are supporting few people (those without debt on their cards).
I am not talking a large amount of money, but it can add up to 1% or so and it can make a nice gift or buy you another gadget that you otherwise might not buy for yourself. Plus it feels fun to get some money back.
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Related Posts
American Express Air Miles Card
CIBC Aerogold and AeroClassic Visas
Credit Card Fees - Are They Worth It
American Express Aeroplan Credit Cards
Scotia Bank No Fee Money Back Visa Card Review
Category: Finance
Original Post: Wednesday, September 5th, 2007
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