Paying with a Credit Card

Use of Credit Cards

Oh, the infamous credit cards. I'm just going to say it - I actually enjoy using them. For people who have control over their money, this is a no brainer. There's a vast amount of offerings just waiting to be taken advantage of, why wouldn't you take it?

Before you go searching for credit card offerings, I want you to make one simple promise: use it like you would with a chequing account. This surprisingly simple task is proven to be so difficult among credit card users. Millions of users are struggling to pay off their credit card debt, as more than $1 trillion of debt account for U.S. alone. So what makes it difficult for one to pay off their credit card in time? There are numerous factors involved, but a major one is perks. When you compare the innovative aspects of a chequing card vs. credit card, you will notice that a chequing card is always lagging behind the other. Cash back/rewards, tap to pay, apple pay, and ecommerce check-out to name a few, were all initially adopted by the credit card providers. Not only is it incredibly easy to create one, but it's also very easy to use. This perk drove the users to rely on their credit cards, to a point where they have become the primary source of payments today.

Proper uses of a credit card

Instead of preventing yourself from using a credit card, which is near impossible today, it may be a better approach to be informed on its appropriate uses. Here are several tips on beating the system:

1. Restrict yourself to a zero-fee credit card - when you have to pay a certain fee to join an 'exclusive' seat at the high table, you may feel the urge to spend more to make up for your initial cost of owning that card.

2. Choose cash backs over other rewards - you are guaranteed a cash back for every dollar spent compared to a point system where you are encouraged to spend more to redeem a specific item.

3. Set a budget for it, and never spend over what you currently have - if you have to wait until your next pay check to cover your credit card, you are doing it wrong. You should never borrow money from your credit card.

4. One is more than enough - many people fall into the trap of opening multiple credit cards based on their unique offerings. They can make it more challenging to manage your spending and keep track of your payment dates.

Credit cards can be a double-edged sword - they have great perks and convenience of use, but it can stab you back with dangerously high interests rates. In moderate use, they are relatively easy to manage and can provide you with some cash backs in return. However, if you are struggling to pay your credit card every month, it may be a good idea to close the account and go back to chequing until you feel comfortable with budgeting.