I love my credit cards, but not because they let me spend a lot of money. I love them because I no longer have to carry much cash, I can shop online, and I earn points and miles on every card I carry.
The worst thing you can do with your credit cards is carry a balance from month to month. I’ve done it, when I was in law school and couldn’t quite pay my card off. That was the most expensive loan I’ve ever taken out. Now I make it a point to pay off each card every month. The cards work for me, not the other way around. (If you can’t afford to pay off your cards each month, it’s time to take a look at your expenses and rein them in.)
Thus, with the caveat that you must pay off your credit cards every month or not use them at all, here’s how you can get the most out of your cards by getting something for using them. Notice that I don’t mention the interest rate, because it’s irrelevant if you pay your cards off every month.
It seems like most people I know have a miles card – a credit card tied to an airline so that they earn frequent flyer miles for each dollar spent. I have one. And I used to have a different one before the one I use now. I cancelled that first one because I didn’t think I was earning enough miles to justify the annual fee of $50. Keep in mind that most frequent flyer miles cards have an annual fee, so unless you’re really going to rack up the miles and take trips, a miles card may not be right for you.
If you’ve decided a miles card isn’t for you, or if you need or want more than one credit card, there are plenty of cards that don’t have an annual fee. Look around for one that suits your lifestyle. Do you buy a lot of things from Amazon? If it weren’t for my miles card, their card is the one I would get. American Express lets you accumulate points, which you can then redeem for a variety of products – gift certificates, luggage, miles and more. Bankrate.com lets you search for a credit card that fits your needs.
Once you have the right credit card for you, don’t forget to use it every chance you get. I’ve used my miles card for purchases as small as $3.74. (Unless I’m at a drive-thru, paying with a credit card is at least as fast as paying with cash.) I also use my miles card to pay off my cell phone bill, the regular phone bill, insurance payments, and more. I’ve been surprised at how quickly the miles add up this way. So take a few minutes to see what’s out there. The rewards are worth it!