Is there a right way to manage credit?

The best way to manage your credit cards…

I thought this was a good topic, and something worth discussing, because I’m often talking about how bad credit card debt is, and discussing ways to reduce your debt, and cut up your cards and all that jazz, and I thought, it may come across as though I hate credit cards, and that they’re all bad!

Credit Card Debt

That’s not in fact the case, what I hate is credit card debt. But if you can manage to use credit effectively, there can be some great benefits. Sadly, this is not something taught in schools, or certainly wasn’t when I was at school.

So, unfortunately so many of us get in a pickle, and then once we’ve pulled our way out of our credit card black hole, we generally don’t want to risk going back there and revert to not using credit cards at all.

I know I did this, when I got back from my first overseas holiday at 18, it took me 6 months to pay off my credit card debt, and I don’t think I used one again for about 3 or 4 years.

Pay in full

Now, however I actually spend most of my money on credit. The thing is, I pay my bill in full by the due date every single month. Mine is actually set up as an automatic direct debit payment right out of my cash hub.

This is why…

The big reason I do this, is that while I’m spending the bank’s money, my own money is sitting in my high-interest savings account earning interest for me. Make sense?

Because I’m using my credit card and I don’t need to pay it until the bill comes, my money gets to sit around earning for me for about a month.

Frequent Flyer Points

The other thing I get is frequent flyer points. And I love to travel. So this makes me happy. Because frequent flyer points mean I save money on travel. And, as you know, I do love to save money.

This is one of those awesome FREE MONEY strategies I love so much. Extra interest in my bank account, plus cheaper flights! Perfect.

Most credit cards have some kind of points or rewards system that becomes an added bonus to putting your expenses through credit.

The most important thing though is that you pay your card off in full every month, and this means you will never ever pay any interest, which is the exact opposite of free money.

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One Response to “Is there a right way to manage credit?”

  1. Jef

    Great tips Sarah.. I use the Amex Platinum card that allows the opportunity to earn heaps of points.. At the same time I’d never sign up to a card purely for this reason alone..

    Good to catch you at the catch-up last night for WE


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