If you read the “My $350 Credit Card Mistake & Lesson” post, you know I have a good relationship with my credit card. Below are the three reasons why I make all of my purchases with a credit card and left my debit card alone for years:
1) Cash rewards
On top of the 1-3% cash rewards, I also get 25% more when I deposit the cash deposit into my checking account. For example, if I get $100 in cash rewards and deposit it into my checking account, I will get $25 more or $125 of free money in total from BoA. Not bad!
I NEVER EVER make a purchase just because of the cash rewards. It’s all the things that I need and would buy with cash.
2) Keep track of my monthly expenses
Mr. FAF and I don’t have a budget. We just don’t. It’s too much of a hassle to detail all the purchases/payments we plan to make for a certain month.
Mr. FAF and I each have our own credit cards. At the end of each month, we make a payment for our credit card balances. And we know exactly how much we spent. We can also go back to the transaction history to see what we bought.
There are exceptions such as rent and electricity bills which are taken out of our checking accounts. But those are few and far between.
When our balance appears unusually high, we go back to the transaction history in our online account and track down the culprit (which fortunately doesn’t happen a lot).
3) Build my credit history
I’d love to buy a house with cash. But given our salaries and the high housing prices where we live, Mr. FAF and I don’t want to keep saving and chase after the rapidly appreciating real estate market in our area.
I’m not sure how many lenders are willing to loan to people with no credit history. But for me, I just want to have a good credit score just in case.
If you’re responsible with money and mindful about paying off your card card balance every month, I don’t see anything wrong with using a credit card. However, if you plan to pay only the minimum every month, I wouldn’t recommend it since the interest rate for credit cards are ridiculously high (13.24% – 22.99%).
Dave Ramsey, my favorite financial advisor and radio host, may not be happy with what I just said since he’s totally against credit cards. But I guess we just need to do what works best for us 😉