Using Credit Wisely In My Retirement

 

In retirement I live a debt free life, but that doesn’t mean I don’t use credit because I do.  Fairly often, in fact.  I use my credit card to pay for practically everything I can and the reason I do that is so I can accrue rewards points whenever I make a purchase.  For every dollar spent I receive one reward point and after I’ve accumulated a good amount of points I can redeem them for gift cards to restaurants and stores which I use to extend my wealth and increase my buying power.  Throughout the month I regularly check my balance and keep tabs on how much I spend to make sure that I can pay off the balance in full and not accrue any interest charges.  If I have to pay interest in addition to my purchase then I’ve just negatively impacted my buying power and that adversely impacts my wealth.

 

When it comes to major purchases, such the refrigerator I bought last summer, I will often consider using financing options such as those that offer me 0% interest if I pay the balance off in full within six months.  I only do this when I already have the funds available to make the purchase.  I will happily use their money and allow mine to sit in the bank and earn interest while I make steady payments over the course of the six months.  Usually I pay it off in full within three to four months.  By using the finance company’s funds I am able to use this time, free of charge, to make my purchase, earn interest on my own money in the meantime and acquire what I need while making small weekly or monthly payments using the money I earn from my part time job and thus no impact to my overall wealth.

 

I am very careful to stick to my budget so I don’t risk over extending myself.  I always want to pay my credit card or any other finance option off in full before I’m assessed any interest charges.  I like the safety of using my credit card for purchases because if I’m ever compromised I know my bank will investigate and make sure I don’t pay for anything I didn’t actually purchase.  I also like to use my credit card over my debit card because if I’m compromised I have less of a financial impact as my bank accounts are not affected and my overall wealth is better protected.  As a result I rarely use my debit card.

 

I know not every financial transaction I make is a safe one, because we all know the risks with hackers, however by being diligent with my purchases and regularly checking my accounts I am limiting those risks the best that I can.  Making fewer purchases and limiting the number of those transactions helps a lot too.