When I was a teenager and when I was in college, credit cards scared the heck out of me. I associated credit cards with debt, collection agencies, and spending money you didn't have. In my 18-21 year old hands, a credit card could have been very dangerous. I know many people who got themselves in over their heads with credit cards when they were younger. Some with a balance of $500-1200 they could never shake, but some getting up to ten thousand dollars in debt.
I knew I didn't want to get myself into that kind of situation, so I never applied for a credit card. Even after I graduated college, got a job, and my own apartment I still wasn't comfortable with the idea of having a credit card. I had a student loan and also a small bank loan that I paid off when I was 19, and these two loans helped boost my credit score, along with paying my electric bill and my apartment rent.
When my husband (then boyfriend) and I first applied for a mortgage we ran into a little bit of a road block...Derek didn't have any credit! Like me, he never had a credit card, and didn't have student loans, and on top of that he lived with his parents or in a home owned by his parents throughout college. He was advised that the quickest way to build credit was to get a credit card. I told him to go for it, but I didn't want any part of it. For six months he put all of his gas on the credit card, paid the balance in full every month, and was able to build up a good credit score.
Fast forward several years, and now I exclusively use my credit card, and I never touch my debit card (unless for some reason I'm needing cash or using a cash back option). So what made me change my mind?
In short, the answer is: FREE MONEY! Reward points are so awesome you guys, I mean, you are literally getting money for free.
Anyway, we started with an American Express card for Costco, because at the time, Costco had an exclusive contract with AmEx, and it was the only credit card accepted. There was no annual fee, and we got an immediate $100 bonus if we spent X amount in the first month. We used it every time we went to Costco, for all our gas purchases, and for some restaurant purchases. I was still using my debit card more frequently than using the credit card, so I never really knew how much money we had, and it was frustrating! So we quit using the CC except when we went to Costco.
Six months later we went to Canada, paid for our tickets out of pocket, along with our hotel in Calgary and our rental car. After talking at length when we returned from our trip, we decided to give another go with using a credit card to build up reward points. We did a lot of heavy research to figure out which credit card would work best for us. We chose the Capitol One Venture, which is a Visa. It has 2% cash back on everything, a low annual fee, and a $400 sign up bonus if we spent $3,000 in the first month - this worked for us because that's the month we went to Vegas and we put our airline tickets, hotel, and all other expenses on the card to help us get to that amount.
After we both got our cards we started using them exclusively, instead of only with certain purchases. We don't use any money from our bank account, and we don't spend more on our credit card than we get paid every month. It's really as simple as that. When you treat your credit card just as if it were a debit card (spending only what you have available) it can really work out in your favor.
Since September of last year, we've earned over $900 in rebates. That's about $150 per month that we get back, just by spending money on things we were planning on purchasing anyway. We haven't used it all yet, but we plan on using it toward travel in the upcoming year.
