August Finance: Credit Cards

I heard the following statements from too many of my peers: "I don't use credit cards. I use my debit card." or "Credit cards are bad."

But as long as you are responsible and pay the full amount (NOT the minimum payments), credit cards are significantly beneficial. It builds your credit and shows that you are responsible; leading to a better credit score (Number of accounts, average age of accounts, Credit % utilization). Debit cards DO NOT build credit and usually don't carry the same benefits as credit cards; debit cards don't really have any benefits besides the money comes out directly from your bank account.

There are tons of benefits including rewards back and purchase protection (I wrote about common benefits here). I personally use benefits of the credit cards occasionally like repairing a cracked screen on my phone or price rewinds.

If you have good credit and spend a good amount regularly on credit cards, you can apply to specific cards for their sign-up bonuses (most have minimum spends in a specific period). This is usually the fastest method of earning rewards/points/miles. If you have any questions on which credit card would best suit you, you could ask me or visit churning sites (like Reddit) (even if you don't plan to "churn", which means continuously applying for cards to earn rewards). It doesn't have to be very complicated either. And these bonuses can definitely add up to things like "free" vacations.

Personally, I have two main cards (Citi Forward (5% restaurants and Citi Double Cash (2% back)) for majority of my spending. Then, I use my other cards (like AMEX Everyday and Discover) when there are specific deals for those cards (or credit network).

Credit cards allow you to gain cash/points/miles on your normal spending; why not take advantage if you are responsible?