We are all familiar with what happens when you go into the bank and meet with one of the bankers. They want to make sure you’re taking full advantage of your banking relationship. One thing they will all be sure to mention is their latest and greatest credit card offer for which you’ve been pre-approved, or they state that the credit card you have isn’t their best one. Either way, you didn’t go into the bank that day to get a new credit card. Has your banker ever challenged you to rethink the reason you use your debit card?
Your debit card has a few benefits, and it enables you to buy goods/services, helps you avoid having a ton of cash on hand (safety), withdraw money from the ATM, and serves as identification if you’re doing a transaction at the teller window. Those benefits are not that compelling, which is what this banker was expressing during a recent conversation. This was when the “ah-ha” moment occurred. Why do we consistently use our debit cards to make purchases? They give us no benefit whatsoever when we could be receiving cash back, travel rewards, points to buy stuff, etc.
Now, some of you may be thinking that it’s silly to use a credit card when you already have the money to pay for something. That makes perfect sense, but have you ever thought about it from the other side. Since you do have the money already (and I’m assuming you do), why not take advantage of the benefits and pay off the full balance at the end of the billing cycle. Now, you won’t be worried about carrying a balance that may be subject to an interest charge. And, you will have reaped the benefits (rewards) of using the credit card. Keep in mind, this type of strategy will not work if you are not a responsible financial steward. Utilizing such an approach will also require you to have a steady income, which will allow you to make that payment each month. Not making that payment and incurring that interest charge is what the bank wants you to do. Let’s make sure to stay in control and use what the bank is offering to your advantage.
You still might not be convinced about this credit card idea, and it’s only because most people don’t challenge the status quo. We’ve been programmed to think a certain way for so long that it’s hard to change. But think about how much money you spend each year on food, dining out and groceries, gas and entertainment. Wouldn’t it be nice to get something in return for all of that spending you’re already doing? The banks know this is where you’re spending your money; thus, they offer these credit cards. All you should do is figure out which rewards suit you best and utilize that credit card to your advantage.