Should I have a Credit Card and should I use my Credit Card for Everything?

by Aaron Read:

Credit cards can be great tools to build your credit, enable you to generate spending reports; automatically pay bills and best of all earn frequent flyer miles or cash rewards. There are plenty of reward cards out that there that can get you free travel or cash back so why would you not want to use one for everything.

First of all some people just can’t handle the temptation of being able to spend on their credit card when they don’t have the funds to pay it off at the end of the billing cycle. They end up paying interest at rates up to 30% or more. If this is you then my best advice for you is to ditch the card and go back to using good old fashioned cash.

If this is not you then why not get some of these free rewards that are out there. The first thing to do is think about what kind of rewards will you use. There is no point paying an annual fee of $60 for a card with awesome airline miles if you never use them. There are plenty of cards that offer cash back. My favorite card though is the Capital One Venture Card that offers 2% towards future travel. I have used many other airline credit cards rewards programs (one of my favorites was the United rewards credit cards) and although you can get the equivalent of more than 2% I feel the flexibility of being able to use my rewards on any kind of travel including rental cars, lodging and flights works better for me. I always hated the inability of being able to find a flight on the day I wanted and then being able to purchase an additional ticket for my wife or kinds at a reasonable price if my points did not get me tickets for the entire family.

So what do I not put on my credit card? Well not much. I only use my Debit card when the cash discount is more than 2%. I would even pay my rent on it if my landlord would accept a card and it would cost me less than a 2% fee. I do purchase gas at Costco when I can as its more than 2% cheaper than using my credit card at other gas stations.

Do some research because there are great cards out there. Some even offer free bonus miles like the Venture One card 40,000 after 3 months when you spend $3,000 on purchases. That’s $400 towards travel for basically doing nothing. Unfortunately some of the better cards aren’t available if you don’t have good credit already. Just remember the key is responsible spending. Don’t put something on your credit card that you can’t afford to buy. If you pay off your card at the end of the billing cycle and can handle not buying something on a credit card just because you can then why not take advantage of some of these great offers. But if you are someone that just can’t handle this temptation to spend then steer clear.