How I utilize Credit Cards in My Life

This guest post is written by Kevin who writes for 20smoney.com, a personal finance blog geared towards young people, and Financial Freedom, a blog dedicated to the pursuit of financial independence.

I do not have any credit card debt, nor do I intend on accumulating any. This doesn’t mean I don’t utilize credit cards. I do and very frequently. My credit card strategy can be simplified into two principles: pay for as much as possible on my credit cards and pay off the balance every single month. Allow me to explain further…

Using Plastic As Much As Possible

I have two main credit cards that I use frequently. An American Express green card and a Starwood American Express card. I use these cards for only one reason: rewards points. With the green card, I earn the American Express Membership Rewards points and with the Starwood card, I earn points to be used for fantastic hotel properties such as W Hotels, Westins, Sheratons, etc.

I attempt to use these cards for everything I . Whether it is a cup of coffee or a major purchase, my AMEX card will be uutilized. Thankfully, I’m also able to put on average several thousand dollars in business expenses every month on my credit cards. This allows the points to add up pretty quickly.

Interestingly, I’m also now able to do my regular tithing to my local church through their online system which accepts American Express. I gladly accept the rewards points for my charitable donations.

By building up my rewards points, I’m able to purchase items that I would otherwise not purchase. For example, I recently bought a piece of Apple hardware and a very nice toolchest for my garage through the American Express shopping. These purchases are deemed “nice-to-haves” not necessities; therefore, i wouldn’t be spending my regular cash on such items. The Starwood points make travel possible for my family and allow us to stay in spectacular hotels for free. My most recent stay: The brand new Ft Lauderdale W.

Paying Off The Balance Every Month

I refuse to carry a balance on my credit card. I do not want to pay a single cent in interest because that is money that I essentially lose. By paying off my American Express cards every month, I have a strong credit record with a reputable company and pay zero financing charges. I do pay a membership / maintenance fee annually, however. If you don’t utilize your American Express frequently, it might not be worth the membership fees, but since I’m able to put business expenses and more on them, it makes it definitely worth it for me.

My only concern with allocating all spending onto my credit card is that it can be easier to spend money when you rely on plastic. It results in a feeling of easy money where you might be less likely to part with cold hard cash. If you implement a spending strategy similar to what I’ve described, make sure you’re still being smart with your money and not overspending. The credit card rewards will never make up for the overspending.