Advertising
Advertising

10 Reasons Why You Should Be Using Your Credit Card For Everything

10 Reasons Why You Should Be Using Your Credit Card For Everything

Credit cards aren’t just used to pay off major purchases anymore. You might feel silly using a credit card for a small purchase, but there are benefits to this transaction! Why else are companies putting credit card slots on drink machines? You should be using your credit card for everything—and here are ten reasons why.

1. It builds a great credit rating.

Buying things with your credit card and then paying them off each month will help you build credit. It will either help you establish a good credit score from the start, or rebuild a good credit score if you’ve had problems in the past. Make sure you’re still spending within your limit, and can afford to pay the bill off in full each month so the interest doesn’t add up and make your bill exponentially larger.

2. It’s quick and easy.

No more hunting for exact change! Credit cards make checkout easy. Just swipe your card, sign your name, and you’re done! Now with smartphone apps, you can pay with a pass on your phone. There are also cards that allow you to just “tap” the checkout machine, and the money is automatically paid!

Advertising

3. It’s great for accounting records.

It’s hard to keep up with receipts, but if you’re sticking to a budget, doing your own taxes, or just making sure you don’t get overcharged for anything, then you need to keep track of those slips of paper. If you use your credit card, however, you have a built-in list of everything you’ve purchased. You can sign on to your bank account online and see what you’ve spent over the past month to make sure you’re still on budget. You can double-check your bank balance and make sure there was no unauthorized spending. You can do all of that—and you don’t have to keep track of anything!

4. There’s no need for cash.

Forget trying to find an ATM, or paying ridiculous fees to access your own money! With a credit card, there’s no need to carry cash. Most companies have put credit card slots on drink and other vending machines, so you won’t even have to scrounge for change! This is also a security issue, because if you get robbed, you won’t be losing cash that will be unaccountable when you make a police report.

Advertising

cokecredit

    5. It has automated billing.

    When you get your credit card, sign up for automated billing! This means your utility bill, cell phone bill, and anything else you pay monthly can be paid automatically by your credit card. It’s a load off your mind, because you don’t have to remember countless due dates, or try to think back if you paid a certain bill or not. Then you’ll just have one date to remember—the due date for your credit card!

    6. You’re establishing good payment habits.

    Paying off your credit card balance every month will help you establish good payment habits. You’ll be paying bills on time with automated billing, and paying your balance each month, whether it’s paying it in full or paying enough to keep the interest down.

    7. You earn frequent flyer miles.

    Using your credit card will earn you all sorts of perks. Make sure you look into your specific card and see what benefits you can get. If you travel a lot, each credit card purchase will earn you frequent flyer miles, or free stays in hotels. You can also get cash back or discounts on major payments.

    Advertising

    8. You can get purchase protection.

    Buying with a credit card means there’s a potential for purchase protection. Your credit card company will handle disputes for you, so if a store won’t take back a defective product, there’s a good chance your credit card company will either fight for you, or reimburse you. There’s also a built-in protection against card theft—most credit card companies will call you when they see suspicious activity. Some even block the card so the purchase won’t go through without your authorization, or reimburse you for purchases that went through with a stolen card.

    9. You get low-cost loans.

    You don’t have enough cash for groceries and bills this week, but you need them both. Use your credit card! Credit cards are like low-cost loans, because you can buy something now that you don’t have cash for, and pay it back at the end of the month when your credit card bill is due. Just make sure you know your budget and don’t go overboard by buying things you’re unable to pay back.

    10. You have a buffer for emergencies.

    Just like using your credit card as a loan system, it’s great as a buffer for emergencies. Things will happen that demand your financial attention, like your heater going out in winter, or your fridge breaking down. Can you afford to buy either of those major appliances in cash? What about hospital bills you didn’t expect? Most people don’t have that kind of cash on hand, but again, with a credit card, you can take out a type of loan. Buy what you need and start to pay it off over time on your credit card.

    Advertising

    Featured photo credit: mueritz via flickr.com

    More by this author

    10 Incredible Benefits of Cuddling That Make You Want to Cuddle Now 16 Productivity Secrets of Highly Successful People Revealed Why You Should Keep A Journal And How To Get Started 15 Differences Between the Boy you Date and the Man you Marry 10 Signs That You’re Ready For Marriage

    Trending in Money

    1 How to Set Financial Goals and Actually Meet Them 2 25 Killer Sites For Free Online Education 3 10 Recession-Proof Debt Consolidation Tips 4 The Definitive Guide to Get out of Debt Fast (and Forever) 5 25 Easy Tips on How to Save Money Fast

    Read Next

    Advertising
    Advertising
    Advertising

    Last Updated on September 2, 2020

    How to Set Financial Goals and Actually Meet Them

    How to Set Financial Goals and Actually Meet Them

    Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

    In this article, we will explore ways to set financial goals and actually meet them with ease.

    4 Steps to Setting Financial Goals

    Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

    1. Be Clear About the Objectives

    Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

    It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

    Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

    2. Keep Goals Realistic

    It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

    It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

    3. Account for Inflation

    Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

    Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

    For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

    Advertising

    4. Short Term Vs Long Term

    Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

    As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

    By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

    How to Achieve Your Financial Goals

    Whenever we talk about chasing any financial goal, it is usually a two-step process:

    • Ensuring healthy savings
    • Making smart investments

    You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

    Ensuring Healthy Savings

    Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

    This is the focal point from where you start your journey of achieving financial goals.

    1. Track Expenses

    The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

    Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

    If you’re not sure where to start when tracking expenses, this article may be able to help.

    2. Pay Yourself First

    Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

    Advertising

    Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

    The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

    Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

    3. Make a Plan and Vow to Stick With It

    Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

    Nowadays, several money management apps can help you do this automatically.

    At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

    Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

    You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

    4. Make Savings a Habit and Not a Goal

    In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

    Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

    • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
    • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
    • If you go shopping, always look out for coupons and see where can you get the best deal.

    The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

    Advertising

    5. Talk About It

    Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

    Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

    6. Maintain a Journal

    For some people, writing helps a great deal in making sure that they achieve what they plan.

    If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

    When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

    Making Smart Investments

    Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

    1. Consult a Financial Advisor

    Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

    Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

    2. Choose Your Investment Instrument Wisely

    Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

    Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

    As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

    Advertising

    3. Compounding Is the Eighth Wonder

    Einstein once remarked about compounding:

    “Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

    Use compound interest when setting financial goals

      Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

      Start saving early so that time is on your side to help you bear the fruits of compounding.

      4. Measure, Measure, Measure

      All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

      If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

      Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

      The Bottom Line

      Managing your extra money to achieve your short and long-term financial goals

      and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

      More Tips on Financial Goals

      Featured photo credit: Micheile Henderson via unsplash.com

      Reference

      Read Next