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Conquering Credit Cards
Written by John Marsch on June. 14th 2022
The perks that come with having a Credit Card are so vast that we believe everyone should have at least one Credit Card. Of course, when we say everyone, we mean those who have the know-how to properly use credit cards. Understand the benefits that come with owning a Credit Card, the necessary management strategies and find one that suits your needs.

Who should have Credit Cards:

The short answer is everyone. By everyone, of course I mean anyone who has the know-how to properly use credit cards so they can receive the benefits the cards offer. Before I explain how Credit Cards should be used, first I think it is important to address why everyone should have at least one Credit Card.

Why EVERYONE should have a Credit Card:

There are many perks for having a Credit Card, but here are the top 5:

Easy money from cash back rewards - Most Credit Cards come with cash back rewards ranging from as low as 1% up to a general max of 5% for specified purchases

Additional security - Unlike a debit card, a Credit Card has an additional layer of security...

Emergency Funds - If you were to ever run out of cash, a Credit Card would provide you with access to funds in the case of an emergency. However, it is important to keep in mind that you can accumulate too much Credit Card debt and if you don't have the means to pay off the debt within 30 days, you want to limit the amount you borrow as most Credit Cards have very high interest rates on balances that are held for more than one payment cycle.

Improve Credit Score - Credit Scores can easily be improved through the proper use of a Credit Card.

Ease of Purchasing (online) - In most cases Credit Cards make it easy to make safe online purchases across pretty much any platform so you never have to worry about whether or not you're able to go through with a necessary transaction.

When to Sign Up for a Credit Card:

The broad answer is “as soon as possible”, assuming you know how to use it and you don’t have one yet. Assuming you know how to properly use a Credit Card, there is no real right or wrong time to open a Credit Card. However, it is beneficial to know if there is any initial cash back rewards for an initial amount spent within 90 days of opening the Credit Card. Based on the amount needed to be spent in the 90 day period, it can beneficial to wait for one of the below circumstances:

• Before paying for a vacation

When I was in my sophomore year of College, I wanted to travel for spring break. I had a family member I could stay with for free in Florida. I researched plane tickets and assumed my trip would cost me about $500 for the 4 days I wanted to be there for. The issue was that I wouldn’t have $500 before spring break rolled around.

I remembered that credit cards allow users to borrow money for a full month before the payment becomes due. I knew that if I had a whole month to come up with $500 I would be able to. What I didn’t know at the time was that Credit Cards generally come with cash back rewards for the money spent on them. As I started researching different Credit Cards, I came across the Chase Freedom Unlimited Card that offered 1.5% cash back on all money spent and it had the additional perk of receiving $150 cash back if you spend $500 in the first three months of opening the card.

Alarm bells started going off in my mind as I was now able to afford my trip, but better yet, I realized the trip would end up only costing me $342.50! I would be able to spend the necessary $500 on the credit card and receive both $150 cash back and an additional 1.5% cash back on the $500 ($7.50). My trip would require I spend $500 on the credit card and I would need to pay $500 back within the 30 days, but I would later receive $157.50 from the Credit Card company.

• Before incurring a big expense

Opening a new Credit Card can come with initial perks in addition to the general cash back. In most cases this will look something like: "spend $(specific amount) within the first 90 days of opening the account and get $(specific amount) in cash back.

When it comes to taking on a new big expense, or when life just kind of happens and now you need a new set of tires, it may be beneficial to open a new Credit Card to lessen the financial burden of the new expense.

How to Properly Use a Credit Card:

Knowing how to properly manage a Credit Card is the difference between ending up in a cycle of crippling debt or receiving a random check for $100 or more every few months from the Credit Card company. 

These are the guidelines needed to properly manage a Credit Card:

Only open Credit Cards you plan to keep open for extended periods of time - The average age of a credit account affects your Credit Score. The older the average, the better. Opening a ton of new Credit Cards is NOT a good idea. Every time you apply for new credit it will drop your Credit Score by 5-10 points for about a year. While this is seemingly not a large change, applying for multiple Credit Cards in a short period of time can have a more negative impact on your overall Credit Score. The key takeaway: Open new Credit Cards sparingly.

ALWAYS pay off the full STATEMENT balance - This single act is the make or break for proper Credit Card management. Being able to pay off the entire statement balance month after month is the only thing that makes it possible to receive the full benefits a Credit Card has to offer, without incurring any additional fees. Doing anything else will negatively impact your Credit Score and it will cost you interest on the borrowed funds. There are two things that make this process easy to manage: 1. Auto Debit 2. Budgeting

Auto-Debit is a MUST - The moment you get approved for your new Credit Card, take the couple of minutes needed to set-up auto debit. Make sure to setup auto debit for the FULL statement balance. Doing this will prevent you from incurring outrageous interest rates that are generally 25% and up. Setting up auto debit also ensures that you will not miss out on payments which will increase your credibility to creditors therefore, increasing your Credit Score.

Building a budget / Monitoring how much you spend - Building a budget is easy, but following one can be difficult for some individuals. We have included a free budgeting template so that you can easily keep track of your expenses so that you DO NOT spend more than you make. 

The whole point of having the Credit Card is for the perks. If you can limit the Credit Cards you open to only the necessary ones, be diligent in setting up auto debit for the full statement balance and monitor your spending so you don't overspend, then a Credit Card will be safe in your hands! 

If the Credit Card is not properly managed, it can be very dangerous to your financial health. If you cannot, or will not monitor how much you spend, steer clear of any Credit until you are willing to do the basics needed benefit from having it.

To get the most from your Credit Card - Assuming a Credit Card is the right choice for you, these are the best ways to maximize your perks:

For all of your everyday purchases, stop using cash and your debit card, only use your credit card. It only makes sense that you should only use your Credit Card to buy everything within your budget as it gives you cash back. If the cash back perks you receive are 1.5% then every time you spend on your Credit Card you save 1.5% of the total cost. In some cases, Credit Cards have increased cash back rewards for certain spending habits like 5% cash back on restaurants etc. It is good to know this, but it shouldn't be a reason for you to go out to eat on a night when you planned to save money by eating at home. Stay within your budget.

Different Types of Credit Cards

Rewards Credit Cards - Credits Cards offered by banks and other companies that offer rewards on everyday purchases and excellent fraud protection. These rewards include things like cash back and hotel or airline rewards points that can be redeemed for discounted or even free travel. Utilizing this type of credit card to pay for goods or services as opposed to a debit card or cash instantly benefits you as you will be rewarded with the perks of the card such as 1.5% cash back on the purchases you make.

Retail Store Credit Cards - Cards offered by retailers that offer customers promotional discounts for purchasing goods and services offered by their business. These Credit Cards offer easy access to a line of credit which can be used to establish new credit history or rebuild credit history, but main benefit they offer is going to be for in-store purchases.

Secured Credit Cards - Credit Cards that are secured by upfront cash. These Credit Cards are great for building or rebuilding positive credit history, but don't come with an actual line of credit from the Credit Card company. Instead, the cardholder deposits cash first, then uses the cash they've deposited so that they cannot overspend.

What to look for when deciding to apply for a Credit Card:

• Initial Benefits (Spend “x” in “y” time and get “z” cash back)
• Consistent Perks (Cash Back, Travel Points, etc.)
• Research the benefits of a Credit Card to see if they match your needs - 

Where to find the Credit Card that is good for your needs:

Create our own list of benefits and organize according to benefits to readers
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What is Investing?
A Credit Card is a financial tool that allows the card holder to purchase items with money that is borrowed from the Credit Card company. Most Credit Cards come with perks to the card holders, such as cash back, and the ability to borrow up to a preset total amount.

About Author: John Marsch

Wes Anderson Portland keffiyeh Schlitz cred. American Apparel synth twee, keffiyeh post-ironic Banksy craft beer.. 
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Best Initial Cash Back Rewards

Lorem ipsum dolor sit amet, consectetur adipisicing elit. Autem dolore, alias, numquam enim ab voluptate id quam harum ducimus cupiditate similique quisquam et deserunt, recusandae.

Chase Freedom Unlimited

1.5% Cash Back

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Chase Freedom Unlimited

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Chase Freedom Unlimited

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Chase Freedom Unlimited

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Chase Freedom Unlimited

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Chase Freedom Unlimited

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