We are all familiar with what happens when you go into the bank and meet with one of the bankers. They want to make sure you’re taking full advantage of your banking relationship. One thing they will all be sure to mention is their latest and greatest credit card offer for which you’ve been pre-approved or they state that the credit card you have isn’t their best one. Either way, you didn’t go into the bank that day to get a new credit card. Has your banker ever challenged you to rethink the reason you use your debit card?
Your debit card has a few benefits, it enables you to buy goods/services, helps you avoid having a ton of cash on hand (safety), withdraw money from the ATM, and serve as identification if you’re doing a transaction at the teller window. Those benefits are not that compelling which is what this particular banker was expressing during our conversation. The discussion then turned towards the new credit card and all of its awesome rewards. This is when the “ah-ha” moment occurred… why do we consistently use our debit cards to make purchases, which gives us no benefit whatsoever, when we could be receiving cash back, travel rewards, points to buy stuff, etc. Now, some of you may be thinking that it’s silly to use a credit card when you already have the money to pay for something. That makes perfect sense, but have you ever thought about it from the other side. Since you do have the money already, why not take advantage of the benefits and pay off the full balance at the end of the month. This seems pretty simple because now you won’t be worried about carrying a balance which may be subject to an interest charge and you will have reaped the benefits (rewards) of using the credit card. Keep in mind, such a strategy will not work if you are not a responsible financial steward. Utilizing such a strategy will also require you having a steady income, which will allow you to make that payment each month. Not making that payment and incurring that interest charge is what the bank wants you to do. Let’s make sure to stay in control and use what the bank is offering to your advantage.
You still might not be convinced about this credit card idea and it’s simply because most people don’t challenge the status quo. We’ve been programmed to think a certain way for so long, it’s hard to change. But think about how much money you spend each year on food, both dining out and groceries, gas and entertainment. Wouldn’t it be nice to get something for all of that spending that you’re doing? The banks know this is where you’re spending your money, thus they offer these credit cards. All you really have to do is figure out which rewards suit you best and utilize it to your advantage.