Mum's The Word
I hate credit cards, but they kinda make sense. Here's why.
Neither a lender nor a borrower
My dad never owned a credit card. But my mum loved them. Both my parents have now passed, but what they taught me will be forever with me.
My dad was old school and always said, "Why would I give someone a piece of paper [cheque, remember those!!] or card that says I'll pay you money when I can just pay them the cash right now."
My mum understood the strange world of credit a little better. "If you don't use credit cards, then no one will lend you money as you have no history!”
The strange world of credit
The perverse thing about credit cards that not many people know is that credit cards really help your credit score [as long as you don’t default].
Credit cards can be scary and they generally encourage you to get yourself get into debt. But due to the multitude of options and competition out there, interest-free switching can save you a lot of headaches and extend your runway.
I learned over the years to utilize these offers of interest-free credit. Clearing the debt at my pace within the 24 months helped relieve my stress levels.
I thought I was good at juggling rewards and cashback, but then I read about this professor dude who took it to a whole other level.
Konstantin Anikeev, a rather brilliant computer science type effectively went to town on the manufactured spending game, using excellent credit and serious planning to drum up millions in charges on a rewards credit card offering unlimited 5% cashback at the time, after a certain amount of introductory spending.
With millions of dollars in transactions generated, without actually spending millions of cash, thanks to the process of churning the credit card transactions back into real cash, more than $300K in cash back was earned in a year.
https://www.godsavethepoints.com/300k-credit-card-rewards-irs-amex/
Parental advisory
Types of cards
There are many different types of credit cards. Some of the most popular include:
0% purchase cards – which let you buy large purchases upfront and you pay back what you've borrowed without incurring interest over a set period.
Balance transfer cards – so you can transfer the outstanding balance from one card to a new card at either a lower or no interest rate for a set period. There is often an upfront fee pay for the transfer.
Reward cards offer cashback, loyalty points or Air Miles if you pay off your balance each month. The interest rates are higher, but if you can spend responsibly, you can earn decent savings.
Credit builder cards offer a way to build up your credit history from scratch or get your credit rating back on track after being refused credit. They usually have lower entry thresholds but higher rates and very few, if any rewards and cashback.
Trends
The chart below indicates that 10,000 people per month search [google] for cash builder cards, so you can see that everybody is looking to fix up their credit score.
credits: exploding topics
Beware - Small Print
Recently a friend had their credit card limit automatically reduced with just a short courtesy email to inform her of the changes! This is annoying because she was depending on the agreed limit to help her purchase items. So beware this could happen to you.
Takeaway
Credit cards are important in modern life. But don't abuse them!
Well, that's all folks for this week. Check out these accounts for yourself, you won't be disappointed.
Bye for now, Paulette.
ps. here’s a list of some of the best credit card websites.
Nicely explained! Sharing with my daughters