Wednesday, March 30, 2016

How I Exclusively Use a Credit Card (Without Going Into Debt!)

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. 

46 comments:

Ashten @ Just Go Left said...

This post is blowing my mind. I was one of those stupid teenagers/early twenties people who got a credit card, racked it up and have regretted it into my thirties. I am finally at a place where having a credit card doesn't scare me but using it exclusively?! Wow! That's amazing! I commend you for being able to do it!!

jackie jade said...

This is so great that you figured out a way to make credit cards actually save you money. We made some recent large purchases on our credit cards, but once those are paid off, I'm planning to get back on the pay it off every month plan and work on getting more rewards too.

Cece said...

I love credit card for that reason! I got one at 18 (college) and never got into trouble with them, so it definitely made sense to use them for free money. I also like not having to have cash on hand etc. If you use them responsibly they can be a really good thing. The companies hope I'll go into debt so they can get interest off of me, but nope. Not doing it!! Work the system.

Hope Roeser said...

I do the same thing! I was afraid of credit cards too, but felt obligated to get one before I studied abroaf because my debit card had a high foreign transaction charge. I have since relied on my cc for the POINTS!! They really are great as long as you are smart about paying them off... great post!

Nicole said...

I also use credit cards exclusively and have no debt. I use the Chase Sapphire card (it had a sign up bonus of 50k point with a $3k spend in 3 months when I signed up). Chase's Ultimate Rewards are my favorite. I do quite a bit of travel hacking and used American Airlines points to get 2 roundtrip tickets to Europe for 80k miles and about $100 in taxes. Saved me over $2400 in airline tickets. I love credit card rewards but it's so important to spend responsibly! Really great post.

Christy Hensley said...

Credit card rewards are amazing. I love getting free stuff for making purchases I would have made everyday. My husbands credit card has almost enough points for us to get a new Macbook!

Macy V said...

Absolutely yes!! I had the same exact feelings as you and now we have been exclusively using a credit card for almost 2 years. We have the Southwest card since we fly so often and it has saved us $2600 in the last 5 months alone (I literally calculated this when I saw Christine's tweet about using credit cards). I love the privacy benefits, and the rewards but it's also really helpful to see one specific place where all of our spending is going to and coming from. Great post!

Michelle Mink said...

my parents did not want me getting a credit card but then i realized that because i have money to pay off what i buy and don't buy beyond my means I was missing out. So i got a cash rewards credit card and never keep a balance on it

Rachel said...

I had the same problem with having no credit history at all and not being able to be approved for a credit card when I was 22! Because I was no longer a student I couldn't get a 'college student' card--I ended up being able to get a joint card with my husband so that I could start building credit history....but then we moved overseas, and where we live, you can't use credit cards, everything is purchased with cash...so I still probably have nearly no 'credit history' although we've kept our credit cards open although we can't use them other than for stuff like buying plane tickets.

Megan said...

I was terrified of using credit cards also & didn't get my first one until I was 22. I got one through my credit union with a small $1,500 limit so I wouldn't rack up too much debt. But, I would get into the habit of using it & not paying it off entirely. I really don't use credit cards very much anymore but it would be nice to have something like the Venture card you mentioned. I was just thinking about this today too so funny that you posted about it!

meghan said...

I use a credit card exclusively for the rewards too. I don't carry debt and pay it off each month, but the rewards make it nice to use the credit card. I just have to be extra careful because sometimes it doesn't feel like real money.

Rosalyn Osorto said...

This was great to read! I had a credit card and I really don't know why I stopped using it but reading your post you have inspired me to start using it again and of course I agree to only spend what you have. Just treat it as a debit card, great post!

Katy said...

Oh man, if I could go back to before I moved out of my parent's and got a place with my husband (fiance back then), I probably would've waited to get a credit card. Now we're trying to get out of the hole we're in! This advice you gave is so amazing, and something that everyone should do.

Rachel Gault said...

I use my credit card the exact same way! Why not earn rewards if you're spending the money already?!

Alison @ Puppies and Pretties said...

Credit cards can be so great if you can use them responsibly. Besides, who wouldn't want free money?!

Kristen @ See You In A Porridge said...

i had the same problem with credit, i still kind of do, because in the eys of the government i am like a 3 year old lol. but i am slowly building it up with credit cards, and we do the same thing.. just pay it off every month. i don't even have a debit card anymore. KC does, so if we need it - like at costco - we use it, but everything else is on the credit cards. we have southwest cards and have gotten so many free flights it's honestly a bit ridiculous.. i can't remember the last time we paid for a domestic flight lol

Cori Large said...

I only use my credit card for online purchases, large purchases ($1000+), and putting gas in my car. Other than that, I either use my debit card or my cash envelopes.

Emily Woodard said...

I feel the same way as you did about getting a credit card. They just seem scary! But, I've been tooling around with the idea of getting one for a while now. It's really smart to just treat it like a debit card. I never realized how much money you can MAKE by using one!

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The Rachael Way said...

I have totally been committed to using my credit card to help myself get free travel rewards. As long as you are responsible it's seriously awesome

Sarah @ Midwest Darling said...

I do this too. I've got a travel rewards card that I use for EVERYTHING. I've been skeptical about opening a new one though because it will lower my "average account length" and therefore lower my credit score. I had the same problem you guys had, in that I didn't have any credit history... so I'm still working on building it. But I still always keep an eye out for good offers ;)


Sarah
The Midwest Darling

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