Credit Cards Are My Best Friend. Why Aren’t They Yours?

I like to joke that credit cards are my best friend. It’s a known thing in my circle. So much so, that for my office Christmas party my coworker ignored the wish list I sent him and bought me a credit card holder instead.

Many of the luxe strategies I talk about involve working your credit cards like tools. I’ve got 6 of these tools. No matter how many I open my credit score tends to hover around 800. And I haven’t paid a cent in interest in years.

But you know what? Not everyone is a superstar when it comes to credit cards. So I thought I’d hit pause before proceeding with regular programming. Because I want to make sure we’re on the same page about how to handle credit cards: that being insanely good with them involves a ton of personal responsibility. This is especially important, because as of 2016, with high-end credit cards like the Chase Sapphire Reserve crossing the mainstream, we’re now officially using credit cards more than ever.

To many people, credit cards are evil. I’m not one of those people. For me, not taking advantage of rewards that credit cards offer is basically like leaving money on the table. I’ve been able to mine thousands of dollars of value from them that I wouldn’t have been able to with cash or debit cards. A wise man once said (OK, really it was my SO): Credit cards are kind of like dynamite: in irresponsible hands they’re dangerous, but when harnessed properly, they can move mountains.

Mountains can be things like, taking your family on a bucket-list trip for practically free. Or, staying in a $1,000 per night hotel for your honeymoon. Or rolling up to first-class boarding when usually you’re like, Zone 43. Or making a $200 mistake purchase that’s ‘final sale’, but then getting reimbursed by your credit card. Or breaking your phone past the one-year warranty mark, but leveraging your card’s extended warranty benefit to get a new one.

So, how do we use credit cards to move these mountains? You have to own the credit card, and not let it own you. To do that, first you’ve got to let go of the fear mentality.

These are the types of things that people who have a fear mentality do:

Refuse to get a credit card, using debit or cash only.
Call credit card companies “scam artists.” (Well, they kind of are.)
Oh yeah, and those people who take advantage of reward opportunities? They’re also “scam artists”.
Freeze their credit cards in blocks of ice to avoid temptation.

I had a roommate like this once. She said she didn’t have a credit card because she didn’t “trust herself” with one. Nevermind that she had a hard time getting approved for the apartment we lived in because she didn’t have any credit.

I refuse to let a credit card have that kind of power over me.

I make credit cards work to my advantage. I get a free, short-term loan, and in return, I get cash back rewards for things I’m buying no matter what, and nearly-free plane tickets to places I’m going to, anyway. So, now, who do you think is in charge?

Do you want to be someone who lets a little piece of plastic own them, or do you want to be the boss?

Second, you have to understand how credit cards work. Maybe this is Credit Card 101 for you, but reminders never hurt.

It is NOT free money.

I don’t know where this idea came from, but the factory who’s pumping out this idea needs to burn down, stat. When I was a freshman in college, I was walking downtown with my friend when a guy set up at a table stopped us. “Hey,” he said. “Do you want a free T-shirt?” I shrugged. Sure, I did. I signed the paper, which actually ended up being a credit card application. And that is my embarrassing story of how I got my first credit card. I didn’t fully understand how the statement cycles worked, and I remember calling customer service to have them explain it to me. Credit cards are confusing on purpose. If you don’t know something, don’t be afraid to call up the bank and have them walk you through how it works. While the statement balances were hard for me to reconcile, the fact that I was borrowing money was crystal clear. I never saw it as free money I never had to pay back, but just a way to buy some clothes online that weren’t available in my city. A tool.

You do not pay the minimum payment.

If you do, you’re letting the credit card gain the upper hand. Think about it this way: let’s say you charged a $100 dress to your credit card, but only pay the minimum payment. If you had an interest rate (or APR) of 20%, that dress is actually costing you $120. When you log into your credit card account to make a payment, the only payment option you should care about is the full ‘statement balance’. Otherwise, it’s way too easy for the interest to snowball out of control.

You pay on time, always.

Whenever I have to pay for something I always swipe my credit card so Mint automatically tracks it for me. When I get a credit card bill, I flag it in my email. I usually pay the full balance the same exact day. But if I don’t, I have those little email flags to remind me. And if not, then Mint will automatically send me reminders of the due dates. All of these little habits add up to a system. I have two systems in place to help me pay my bills on time. But what if the payment due dates are inconvenient, like right before I get paid? Or if you have multiple cards (like me), and there are too many dates to keep track of? My question to you: Did you know you can change your payment due date? If you’re an introvert like me, it’s super easy to do it online without having to talk to a customer service rep. Take control and change your payment due dates if the current ones are making it harder for you to pay on time.

You do not charge for amounts you do not have.

When I was in my early-mid twenties, I got myself into about $6,000 of credit card debt. I couldn’t afford my lifestyle. I had no idea what my expenses were. I didn’t have a budget. At some point, I wondered about how I was going to pay my rent. And all of this was 100% my fault.

Always have a sense of how much money you have in your bank account. So, if you’re considering a pair of $100 shoes, before you swipe, ask yourself:

Do I have enough to cover this in my bank account?
Is this money already spoken for, like, any upcoming bills?

If you have some sort of tracking app or system on your phone, it will be a lot easier. The more you track, the more intuitive your purchases become. I honestly check my money every single day. Some would say that’s overkill, but the system works for me.

Final Thoughts

And that’s my honest take on credit cards, because if you have trouble with any of the four steps above, then my strategies might not be for you. One of the main purposes of this site is to empower you financially. For that reason, I so want you to handle credit cards like a total BOSS, so they can be powerful tools, not shackles. Because if you do, you’ll be able to unlock some fabulous benefits. But tread carefully.