Disclosure: Some posts contain referral links (much love if you use them!). Opinions expressed here are the author's alone and have not been reviewed, approved, or endorsed by any entities.
Today I thought it would be a good idea to share about how we use our credit cards, and how using your credit card the right way can help you get more points and rewards without paying extra, losing money or flying a ton.
But first, some background. I grew up home-schooled and this allowed me some non-traditional experiences as a kid – like working on a farm in middle school. The money that I earned from my monthly paycheck at $3.25 an hour (true story) wasn’t all for me to spend as I saw fit, which I should note that I thought that was very unfair. 70% went to the bank (and would later pay for my first car and my year of Bible school in Germany), 20% I got to keep and 10% was for tithe.
I got my first debit card when I was in high school. It was from our local credit union where my account had been growing since I was a wee lad. I’d moved on from the farm and the debit card came with an understanding that my money was mine to manage now. I was working multiple jobs and making more than my initial $3.25 an hour, and now the training wheels were off.
This gradual transition to full “ownership” of my earnings was one of the things that helped me appreciate smart money management from a young age. And with the initial plan of 70/20/10 that my parent’s put into place, I came to appreciate how quickly money both grew when you were smart with it and disappeared when you weren’t. There were plenty of times when my 20% was frittered away on this DVD or that DVD (I was very concerned with my DVD collection, OK people). On the other side, I saw first hand the benefit of those savings when I bought my first car in cash and later paid for Bible school.
How To use your credit card
While I’m sure you all enjoyed that great little story, what I’m trying to say is this: when I first got my debit card, I was ready to spend wisely and intentionally, with money that I knew that I had. Years later, when I got my first credit card in college, this mindset remained, and it is key to have a similar mindset if you want to set yourself up for success in the credit card arena.
While I understand that this is not possible for everyone in every situation, if you are getting credit cards with the purpose of maximizing the bonus points to earn free travel, treat that credit card like a debit card. Only spend money that you have in your bank account, and don’t go out of your way to spend additional money just to “meet the minimum spend” needed in order to hit a bonus (a.k.a. “Spend $2,000 in 3 months to get 50,000 bonus points”). Your spending habits should not change with a credit card, the only thing that should change is your spending purpose.
How I use my credit card
So what exactly do I mean by that and how does it look? When I have a credit card that I opened up with the intention of earning bonus points, all of my spending is funneled on to that one card. I don’t spend money I don’t have, or suddenly start spending lavishly or extravagantly, I just go about life as normal, spending what I typically spend. And this is the key to how to use a credit card like a boss: treat it like a debit card. Spend money normally. Spend money you have. Don’t start buying unnecessary things. Basically, don’t let your credit card go to your head. Keep a debit card mindset.
And look, I know this is not possible for everyone. Sometimes you have to carry a balance when you are waiting for that next paycheck to hit. And that is OK. But if you are looking at credit cards to earn miles and points to help you hit your travel goals, it is incredibly important to not change your spending habits just to hit those goals. Doing that would compromise short-term benefits for long-term headaches.
The Simple Summary
If you decide to use credit cards as a means to free travel – that’s awesome! I’m here for you and totally on board with it. Just make sure you have a couple things down pat first:
- Don’t hit the spend needed to trigger the bonus and then start making the minimum payment – interest payments will offset the bonus you get and you’ll really be paying money for those extra points.
- Treat your credit card like a debit card – only spend money that you have on things that you need.
- Don’t view your credit card like a gateway to another lifestyle now that you have a $10,000 limit. Your spending habits should not change, the only thing that should change is that instead of a debit card, you are using a credit card.