Once you get to the point where you don’t owe anything, and pay off your credit card, in full, every month, and the bank realizes that you have some self-control, they’ll start using better bait.
They’ll say “For every $100 you spend, we’ll give you points or miles towards free <whatever>.”
Don’t fall for it. Points and miles are a scam. You can’t pay your electric bill with miles. The pizza delivery guy won’t take points.
In fact, if you look closely at the entire deal, you’ll discover that your points are . . . wait for it . . . “mostly worthless.”
Get a credit card that pays you cash. Don’t let the bank fool you into thinking that “points are as good as cash.”
Only cash is as good as cash. Everything else is something different.
However if you’re careful, it is possible to work the system in your favor.
Use your credit card for everything. Pay your utility bill with it. Pay your insurance bill with it. Car payment, groceries, anything you can. But not for anything you don’t actually need, or anything you can’t afford. Really afford. As in “I’ve had this money in the bank for 6 months and know it’s there.”
When I spend $100, my bank gives me $2.00.
Not impressed? If I spend $20,000 this year (not impossible), they’ll give me a $400 check.
It’s free cash that I can spend for part of a cruise, drinks on a Caribbean beach made in a coconut, or a quiet dinner for four at a really nice restaurant.
It’s not a fortune, but given a choice between paying a few thousand dollars in interest, or getting a free massage on a Caribbean beach with a free drink freshly made in a coconut, followed by a free dinner in a great restaurant, the choice becomes clearer.