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.
I try to get credit card points too. I use my credit card to buy my gift cards early in the year. I start with four $100 cards to Aldi, $100 to Dollar Tree, $100 to my fancy grocery store. Then I get the points early in the year and don't have to pull out my credit card all the time when shopping. I even buy a gift card for gas at my local gas station. But, you are correct, before I do this I have the money set aside for the credit card bill! Carrie
ReplyDeleteExcellent Carrie!
DeleteWonderful post! I also use a credit card that I pay in full every month. I declined a debit card and instead asked for an ATM card..
ReplyDeleteVery good!
DeleteI use my credit card in exactly the same way. I see it as a tool, much like you would a dollar bill. I pay my bill in full every month and generally, I use the points as cash on Amazon to buy things I cannot find in stores. In this way I am able to keep up with small projects around my house at no great expense.
ReplyDeleteWell done Gina!
DeleteI never used my debit card. I'd rather accrue points & pay the card off every month. Most of my Christmas presents in the last few years were purchased with points. I don't do a lot of shopping so we tend to accrue points on big purchases like car repairs or a new oven - stuff like that plus groceries and gas.
ReplyDeleteVery good Margaret!
Delete