16 Tips to Make Credit Cards Work for You, Not Against You

This post may contain affiliate links. Please read our disclosure page.

A credit card is a financial tool when used correctly. Many people look negatively upon credit cards, when in fact, they offer many benefits. For example, a credit card may help you stay on budget, increase your credit score or it may even pay you cash back for your purchases. Still not sure that a credit card is a benefit you want to consider? Check out the ways they can help you below.

Bonuses

Rewards and Points – Yes, you can get rewarded for using your credit card. You may earn points for every purchase or just purchase at certain stores/for certain items. Know the terms of the card and let those points accumulate. Over time, you can convert the points to rewards, including cash back, statement credits, airline miles, and gift cards. Look for the greatest return when choosing your bonus to make the most of your points.

Frequent Flyer Miles – Some credit cards offer frequent flyer miles rather than points. For every purchase (and sometimes certain types of purchases) you earn miles. You can turn those miles into free airline tickets and sometimes free hotel stays. Some cards have blackout dates or certain restrictions, so make sure you know the terms.

Signup Bonuses – Many credit cards offer a bonus just for signing up for the credit card. You typically have to charge a certain amount within the first three to six months to get it. Know the fine print on the credit card terms and earn your free money just for charging things you would normally buy.

Cashback – Who doesn’t love getting cash back on their purchases? Many credit cards offer a percentage of your spending back in cash. Watch the fine print as many cards offer special bonuses during certain times of the year. For example, you may get an extra percentage cashback on grocery or gas purchases for a limited time.

Security

Fraud Protection – You can identify fraudulent transactions immediately by looking at your credit card statement or checking your account online. Many credit card companies also offer fraud alerts if they suspect suspicious activity on your account. Most credit cards protect you against fraudulent activity, with fraud liability programs that limit your accountability in the transactions.

Safe online shopping – Online hackers are increasing lately, but with a credit card, you have limited liability should your card get stolen. While you can do your part by only shopping on secure sites and never using your credit card on an unsecured connection, your credit card company has your back, protecting you from fraudulent activity.

Less cash on hand – If you travel or even just head to the mall, carrying a large amount of cash puts you at risk of theft and loss. Using a credit card, you don’t have to carry the cash and become less of a victim. If someone steals your credit card, you can cancel it immediately, putting an end to their spending spree.

Keeping vendors honest – Everyone makes mistakes, even vendors. When you charge your purchases, you have recourse with the vendor. Call the big guns! You can file a dispute with your credit card company and have the charges reversed if, in fact, it’s determined that there was an error.

Keep your privacy-Borrowing money from a friend or family member is a risky business. We all know this can result in an entirely unexpected set of problems. You could lose your money and relationship. You could also lose your privacy and dignity. Well, you get the picture. Sometimes it is better to quietly use a credit card.

Ease of Use

Convenience – It’s the worst feeling to reach into your pocket for cash and find that you’ve run out. A credit card can always be with you, giving you easy access to a payment method without the worry of carrying cash.

Universal acceptance – When you travel, especially abroad, you may have a harder time having your payments accepted if you pay with cash or check. A credit card, however, especially one from Visa, MasterCard, or Discover is universally accepted around the world, giving you peace of mind that you’ll have a payment method no matter where you travel.

Helpful for Budgeting and Finances

Expense Tracker – It can be hard to track cash. Unless you keep every receipt, you may find yourself wondering where your cash went. When you use a credit card, you can instantly check your transactions online or wait for your monthly statement to help you figure out where you spent and possibly revamp your budget.

Grace Period – When you spend cash, you pay it immediately. If you use a credit card, you get a grace period of at least 21 days. This gives you a little more time to make the payment without worrying about interest charges adding up. If you don’t pay the balance in full, you will accrue interest charges after the grace period.

Build Your Credit Score – Using credit cards can be good for your credit score. If you charge items and pay off your bill each month, it shows financial responsibility. Even keeping a small balance is okay as long as you make your payments on time every month. The longer you have your credit card, the more it will help your credit score too, as ‘credit age’ impacts your credit score.

Traveling Benefits

Trip Cancellation Insurance – Many credit cards automatically include trip cancellation insurance benefits should you have to cancel a trip. If you book the trip with your credit card and have to cancel or interrupt the trip, you may have some financial benefits; check with your credit card company to learn the terms.

Car Rental Insurance – Many credit cards automatically offer car rental insurance should the rental car have damage, get stolen, or get vandalized. You must pay for the rental with your credit card in order to use the benefits. Check with your credit card company to find out the exact terms of the insurance provided to you.

So what’s the catch?

Credit cards can be a valuable financial tool that helps you stay within your budget, build your credit score, and earn valuable bonuses. The right credit card will have the lowest (or no) annual fee, low-interest rate, and competitive terms. Just like you shop around for mortgages and personal loans, shop around for the best credit card to make the most of this financial tool. It all boils down to this: its a financial tool.

Don’t say I didn’t warn you.

Here’s something we can both agree on- Credit cards be can be your best friend or your mortal enemy! If you’re worried that you might overspend, stay away from credit cards.  According to the most recent statistics, the average American household carries around $7,200 in credit card debt. You have to be disciplined.  Pay your bill in full every month. Never pay your bill late. Know your limits. You see my point, right?

I’d love to hear from you in the comments.

Related blog posts and resources:

20 Powerful Motivational Quotes About Success and Life

20 Powerful Motivational Quotes to Inspire You to Be Successful

20 Powerful Motivational Quotes That Will Inspire You to Succeed

20 Powerful Motivational Quotes to Help You Achieve Your Dreams

20 Powerful Motivational Quotes to Start Your Day

80 Passive income and Side Hustle Ideas you can try today

24 Easy Ways To Make Money On Fiverr

40 Ideas for a Lucrative Side Hustle

16 Tips to Make Credit Cards Work for You, Not Against You

15 Important Criteria for Choosing the Best Place to Live in Retirement

10 Steps to Take if You Start Retirement Without any Savings

Personal Finance Blogs

Understanding How Your Credit History Works

Mahugu Nuthu is a content creator known for his compelling and well-researched business analysis.  His blog MHGcode.com, provides insights and proven strategies for effective entrepreneurship, side hustle hunting, passive income pursuit, small business ideas, saving and tips for slashing costs.

This information is for educational and entertainment purposes only. The information that is shared on MHGcode.com shall not be interpreted or construed as financial, accounting, legal or tax advice and should not be acted upon without further professional advice.