Historically, I haven’t been a big fan of credit cards. That’s probably due to the fact that they led me deep into debt at an early age. I discovered credit cards in college, and used them to leverage myself to a lifestyle that I couldn’t actually afford. I abused credit cards for almost a decade, then abandoned them completely for nearly as long.
In June 2007, after almost ten years away, I re-entered the world of credit cards. At the urging of Get Rich Slowly readers (who believed I was mature enough to give it another go), I picked up a Capital One No-Hassle Cash Rewards Visa. It’s been my primary card ever since — and I haven’t had a single problem with it.
I think the difference between the old me and the new me is that I treat my credit card as a tool instead of a way to cheat the system by spending money I don’t have. Because I’m the CFO of JD Inc, because I’m the boss of my money, my credit cards are conveniences that can help me make better use of my money. But I treat them with respect, and I have rules.
- For one, I never use credit unless I have cash in the bank to cover the expense. Never.
- Similarly, I always pay my bill in full when it comes due. Always.
- Finally, I do my best to make my purchase decision before I decide how to pay. I’ve read plenty of studies that show folks who use credit spend more, so I try not to let my method of purchase influence my decisions.
So, I’ve become a happy, responsible credit card customer. But I’ve never tried to do more than that. I have lots of friends who are into travel hacking and credit card “churning”, two hobbies that allow smart folks to essentially make money off the banks. With one exception — a British Airways card I picked up in 2011 so that I could get 100,000 bonus miles — I’ve thought these activities were too “fussy” for me. Plus, I thought maybe they were risky.
Recently, I’ve changed my mind. [Read more…]