There are some people who hate credit cards, they think credit cards are there to get their money, it is true if you are not using them correctly credit cards can ruin your finance, and most people I know have credit card debts that they can not pay.
But if you use credit cards in the right way, they can be a great tool that can help you to create wealth and enjoy benefits very few people can enjoy.
In this post, I am going to share with you why you should always pay using a credit card.
What is a credit card?
A credit card is a thin rectangular piece of plastic or metal issued by a bank or financial services company that allows cardholders to borrow funds with which to pay for goods and services with merchants that accept cards for payment.
In simple terms this is a short-term loan, that you can use to pay for goods and services, and at the end of the period, you will have to pay that loan without interest but if you do not pay at the end of that period the credit card issuer will start charging your interest.
How does a credit card work?
The credit card works in a very simple way, the credit card issuer ( the bank or financial institution) will issue a credit card with a limit of the money you can use ( banks money), and you can use that money in a 30 days cycle and then you will have between 10 t0 50 days to pay back that money without any fee or interest.
6 Reasons Why You Should Always Pay Using a Credit Card
Here are the 6 reasons why you should always pay using a credit card.
It has extra protection
You are using the bank money, not your own money as in debit cards, so the banks or financial institutions need to protect their money.
Credit cards will give you protection against unknown charges, they will provide you with extra warranty for the items you buy using them and some of them have protection against theft.
I remember one year ago I bought Airpods using my American Express card, and when I was going out for a run I lost them, I called the Amex line and explained the situation and they refunded me the money I used to purchase those Airpods.
My recommendation buy everything with credit cards when possible.
You are using other people’s money
This is very important for entrepreneurs since credit cards are short-term interest-free loans you can use them to fund your business even if you do not have money.
Another day I was watching a video of this kid who got a credit card with a limit of 3000 USD, what the kit did is to start an Amazon FBA business, when people order items from his store, he would buy the item from China using a credit card and ship to the customer, then the customer will pay the money and it would take about 30 to 45 days to get the money, and he would take up to 60 days to pay back the money to the credit card.
When the money arrived from Amazon would pay the credit card balance and keep the profit, did this to build a million-dollar business.
I use credit cards in a similar way, I can set up an affiliate campaign to promote Clickbank products and use a credit card to buy ads, Clickbank usually pays me between 14 to 21 days after the sale, so I will get my affiliate commissions before it is due to pay back the credit card company.
Off course for this to work you will need to have a winning campaign that makes you money and they are not easy to create.
I know there is a risk to this, you need to do your due diligence but if used correctly you can use other people’s money to fund your business and start making money online.
You get rewarded using credit cards
Credit card companies make more money when you are using their products, they make money from transaction fees and interests so the more you use the credit card the more money they make.
This is the reason many companies will incentivize you to use their credit cards, some cards will give you a small percentage of the amount of money you pay as cash back, I get 5% when I use my credit card in a restaurant or pharmacy.
Some of them will give you Amazon gift cards, travel miles and hotel discounts, unique experiences, and so on.
Just pick the card with the rewards you know you can enjoy and use it as much as you can, there is no need to pick a card that gives you travel miles if you never travel, pick one that suits your lifestyle.
It will improve your credit score
You know in school we used to have exams and according to your score, they will determine which universities you had access to and which scholarship you can get.
As an adult, there is a different way to judge you, and it is called the credit score, basically, it is a number between 450 and 860 that indicates how well you can manage money, the higher the number the better you can handle money.
Using credit cards correctly will help you to improve that number and it will give you access to business loans with lower interest rates, high-end credit cards, and so on.
You can get to travel for free
Most high-end credit cards offer desirable rewards, especially for high spenders, they will reward you with free travel packets ( airplanes or hotels) depending on how much you spend using their cards
For example, American Express will give you a 2×1 flight ( you pay for one ticket and they give another ticket for free) inside Mexico if you spend at least $10,000.
The more money you spend the more perks you will get.
Do not spend money just to get a free flight, spend your money on things you would buy even without the credit card, and then the reward will be free.
You get a lot of discounts
As I said credit card companies want you to use their credit cards this is how they make money.
They will have discount deals with many retailers just to make you spend money, for example, here in Mexico we have a hot sale in the first week of June, you can get up to 70% discount.
For example, I bought a ticket to Istanbul for $2000 this week and I got $400 as cashback for this promotion, which is an extra $400 in my pocket, again do not just buy things to get the cashback buy them when you actually need them.
That is it those are 6 reasons why you should always pay using credit cards, in order to get those benefits you need to use your card correctly, that is pay the full debt before the due date so that you can never pay any interest while you enjoy the benefits.
It is stupid to get 5 percent of the cashback and pay 20 percent in interest, you will lose money and never be wealthy.