Don’t become a slave to your credit card, become the master of creative cards!
Most of us have one or several credit cards but unfortunately very few of us seem to use them to our advantage. According to the statistics, 65% of users use them as a crazy card, running high balances which they never pay off! I don’t want you to be one of those using a crazy card the wrong way, costing you an arm and a leg every month plus a lot of stress and anxiety!
Why not use it as either a credit card or ideally as a creative card instead, basically making the most out of the card to your advantage. Calm down and enjoy the benefits that come with the card instead of having anxiety and nightmares because you use your credit card as a crazy card!
What is a credit card?
A credit card is something you normally get from a bank (or a credit institution) and it gives you a credit. This means you can use this plastic card to spend money you don’t have! Most adults have a credit card or two, either voluntarily or not (they might have been persuaded into getting one). You use it to purchase things and are then supposed to pay off the balance by end of month. If you do this, there is normally no extra cost to you.
As a starting point, a credit card if used correctly can be great. You can purchase something today with no money paid up-front and then pay it back when your balance is due. If you use it this way, you actually have free credit during this period. This used to be great because you could then have your money in your account earning you interest instead of using them to pay for your purchases immediately. Currently interest rates are very low in the western world so unfortunately it’s no longer as advantageous as it used to be. The really, really sad and potentially disastrous thing is IF you don’t pay off the full balance when due, that’s when it becomes a crazy card.
What is a crazy card?
That is when you use a credit card in a crazy way! Unfortunately this seems to be the case for many of us since approximately 65% of the users don’t pay their monthly balance! If you are like the average american you will have around 5,000 USD in credit card debt at a cost of 15% per year. If you only repay 2% every month, it will take you more than 27 years to pay it back and your total payment will be around 12,500 USD according to www.bankrate.com.
What is even worse is if you pay even higher interest, miss out on payments or, god forbid, you take out additional credit to pay for the existing one… Then you are creating a massive snowball of bad credit which becomes more and more expensive and you are guaranteed to mess up your credit score and your financial situation!
DO NOT let this happen to you! Take control asap and be very restrictive on how you use a credit card! Also be aware that most providers are very pushy when “selling” their cards with great initial offerings etc. but they are not doing you any good. They just want their claws into you and slowly but surely will be tapping you of your money whilst doing their best to make sure you are still stuck with them (i.e. new promotions etc. when you are finally starting to get back on track…). If you are in this situation already, do something NOW because it has to change! Ask someone you know who is financially savvy for help or go through all my sessions in our Wealth Section to make sure you take back control of your life. I have sections specifically on credit cards as well as getting out of bad debt. A life on your terms does not include a crazy card..!
What is a creative card?
It is still the same card, you just use it to your advantage and you are being creative about it. You also make sure you ALWAYS pay back the full balance when it’s due! That is a no-brainer that always has to be taken care of no matter what!
So by being creative I mean to look for great deals that suit your needs and use them to your advantage. After you have done my training sessions on taking control over you finances. You will know where your money is going and where you really want it to go. Based on how you have then decided to divide your money into your different buckets, there will be certain credit cards that are more suited for you than others.
As an example you have these cards currently available in the US:
Credit card with travel perks. This card might not be suitable to everyone but if you will spend the above amount and you travel a bit, then this looks like a great deal (I have NOT looked at all the details). It is clear that the annual fee is high so you would most likely want to cancel it after 6-12 months.
Credit card with cash back perks. This card is interesting if you are just looking at cash back in general. There is a cap though and the deal differs during different periods but if used correctly, you should be able to get 300 USD cash back reward in one year (equivalent to an income of 600 USD if you are in the 50% tax bracket). Again, whether this is something for you totally depends on your circumstances.
Quite often you get the first year for free, which is one reason many people get new cards. The card providers know that very few people will remember to cancel the card after one year so they will still make money. When you do get a new card, put a date in your calendar 10 months from now as a reminder and then decide whether or not you should cancel the card. Most likely you want to get rid of the card as there will be now be other ones with suitable offers, also offering the first year for free.
Personally we travel a lot so we appreciate the travel insurance which is normally included in these cards. We also look at the currency conversion fee as well as any withdrawal fees, which can eat a lot of money. Over the last six months I would say we have saved around 300 USD using a creative card compared to having used the “average” credit card. That is 300 USD after tax so to make that back, I would have had to make an additional income of 600 USD (high tax bracket). The only thing I need to do once a year is to look into what great cards are available and which one to use when. Another favorite includes car hire insurance which normally costs around 10-20 USD per day and if we rent a car for 20 days per year, that is another 400 USD (800 USD before tax) staying in my pocket.
That is what I mean by creative cards. There will always be opportunities for creativity since there are so many people using them as crazy cards and they are the ones subsidizing my benefits.
Make sure you use the right card at the right time and you might be able to save thousands of dollars!!
Actions to take:
- Go through my Wealth Sessions and make sure you are in control!
- Check out this post: How to always have enough money!
- Learn the Language of Money – it will serve you for the rest of your life!
- Make sure you take immediate action to stop the craziness if you are one of them!
- Make use of The Bucket System – Automating your Finances
- How to change your Money Mindset
- Go through the whole Wealth section from scratch and become a creative master with control!
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