Credit Cards: Choose Wisely

Credit Cards are a great way to earn free stuff, keep track of spending, and build up your credit score…if used wisely.

Firstly, when choosing a credit card, stay away from a point system because the ratios are never good. You have to spend 20 thousand to get a coffee grinder that you can get for $15 at Target. Instead, go with either travel rewards or cash back. I like cash back because I get to decide where that money goes. For instance, paying down the credit card, buying something I actually need, or booking a flight without having to deal with charges. By the way, According to Consumer Reports, 78 percent of airlines miles are never redeemed.

Second, call your credit card company to authorize automatic payment on full balance at every billing cycle. Don’t even think about getting a credit card if you’re not going to do this. This way, you’ll never pay interest and you won’t be in debt.

Third, track and monitor your spending at least once a week. We’ve found Mint.com very easy and intuitive to use. It downloads your bank/credit card statements and pools it all into one place. Tag your purchases using smart categories so that every few months, you will know how much you spent on coffee at McDonalds or on groceries.

Bottom Line: Spend only what you have. Never Pay Interest. Pay on time all the time.