In this Innovative Finance Series article I’ll explain how to swim with the sharks and not get bitten (in your wallet) with the credit card companies. I suggest hitting up my first article in this series called: Automate your Finances after you’re done reading this one because you’ll learn some key points to automated/hassle free finances. Given the current economic conditions, it’s safe to say that people have overused their credit and credit cards. You’ve probably seen a bunch of financial experts all jumping on the “no credit card” bandwagon and this isn’t without its good reason.
However, they are giving advice for the greater masses of people who, in the end, always fall back on credit and dig themselves in a hole. I’m sure there’s a ton of statistics out there that prove that the companies always win. However, statistically, I choose to believe that my TftM readers are not your typical credit card statistic. 
Technique Overview
Basically credit card companies make it real enticing for the average Joe to use their product. They do this in the form of rewards, miles, or cash-back. Personally, I am a fan of the cash-back model. The problem is that the average Joe never does the math and keeps a balance on the card every month. You aren’t an average Joe though are you? No, I didn’t think so. Therefore, you find a suitable rewards card (see further in article for recommended comparison sites) and use it for every single daily expense you could possibly use it for.
Carry some emergency cash in your wallet if you want, but just use the credit card “as if it were cash”. I know I’ll get blasted – so hold on. Now very important you must pay this balance off in full, every single month, in order to not be charged finance fees and interest. Basically, you’ll be using the convenience of a card and getting paid money for being smart about it!
- Find a suitable Rewards Card and Apply
- Have emergency cash in your wallet
- Use the Rewards Card for everyday purchases and fixed costs.
- Pay off your Bill each and every month in FULL
- Reap the Rewards and Cash back benefits at THEIR cost!
Discipline
This technique can work but you must be militant in your discipline to pay down the card every month. By the way, I only suggest having one credit card while doing this. The problem is that most people obviously are not disciplined or fool themselves into believing they’ll pay it off over a period of time. As soon as you think this way YOU LOSE! ::stamps Statistic on your forehead::
WARNING: If you do not have rock solid discipline, these tips will not work for you. In fact, it could put you in more debt if you aren’t inclined to pay down your entire bill every month!
Get a Financial Cushion
I’ve become a big fan of always having an emergency fund. For this, you will need to have some money laying around just incase things go south one month. In fact, even if you don’t read anymore of this article you should really be thinking about having at least $1,000 in a no-touch savings account. The point of this is, if later in the steps you cant make a payment on your credit card – you use the emergency fund.
Personal Favorite
Right now, I am using Chase Freedom credit card. They seem to be the overall best, but of course its a personal preference. They have a few websites like BankRate and CreditCards that show all the types of cards you can get. Of course, you should choose something that gives you the rewards you want without any gimmicks. I’m also a fan of Chase because I setup Blueprint that allows you to track all your expenses into categories and choose what categories you’ll always pay off.
Paying All and On time
I’ll stress this one more final time – pay off your credit card in due time, every month. This whole method will not work unless you do that. Every month you should have your credit card at a zero balance. If you can not do this, then I suggest using Cash or Debit cards!
- Pay On Time! Check your banks payment schedule.
- Pay In Full!
Conclusion
I’m sure some of you PF experts out there will be ready to flay me for my suggestions, and that is fine. Many people argue that credit card companies design everything for them to win. That is true, but they play the statistics game also – that the majority will eventually, fail and rack up interest bearing credit. My suggestion? Don’t be a statistic – stay smart, pay off early, and keep a zero balance. Have your own suggestions? What works for you all out there? Let us know!
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