Use Credit Wisely - Credit cards will pay you

It's time to make your credit cards pay you using this step of my 6 step plan. When you make a purchase with a credit card the store gets charged a fee by the credit card company. Many credit card companies pay you a portion of this money in the form of rewards. They're hoping you'll carry a balance and only pay the minimums so they make money from you as well but you're too smart for that! The lesson about eliminating bad debt taught you it's painful to carry credit card debt. From now on treat you credit cards like cash. Make the following promise to yourself:

Credit cards are the same as cash. I will never spend over my budget. I will always pay them off in full every month.

With that promise in mind you should maximize your use of credit cards for routine spending to get money back in the form of rewards. If you're spending money on necessities within your budget you might as well get some of that money back. You won't be charged any interest as long as you pay off the full amount with every statement.

The key is keep yourself disciplined. Don't break your promise! You'll need a system to track how much you're spending. Personally, I use Quicken because it automates the process for me but you can use any tracking system that works for you.

If you want to build your credit score you need 4-6 credit cards with high limits that you pay off monthly. Keep your oldest credit card to boost your credit score but consider cancelling your other cards and using the ones I recommend to get the most money back. Type the name of the credit card in the search box at to get the application.
  • 5% cash back on gas and 2% on groceries using PenFed Cash Rewards. The best thing about this card is they automatically pay you the rewards in your account monthly. You don't need a $50 minimum like most credit cards to get your reward. Cash back always trumps airline points in my book. Airline points come with blackout dates and often expire after a year.
  • 5% back on restaurants and using Citi Forward. You can actually triple the bonus by using your points to purchase restaurant gift certificates from They offer $25 gift certificates for $10.
  • 1.25% cash back on everything else using Bank of America Accelerated Cash Rewards. You'll only get 1% cash back on other rewards cards, it may seem like a small difference but it adds up with a year of spending.
  • When traveling overseas avoid foreign transaction fees using Capital One No Hassle Cash Rewards . Credit card companies charge you up to 3% of the purchase price when you use your credit card overseas. No such fees with Capitol One and they'll automatically apply your cash back rewards to your account!
I save hundreds of dollars every year using my credit cards wisely. If you remain disciplined with your budget the same approach can work for you too. Don't pass up free money!

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