Many of us have a push-me, pull-me relationship with credit cards. When you’re on top of your credit card balances, pulling out a card feels like a quick, simple reward. But if you haven’t figured out the end-game strategy for paying everything back, the temptation to say “charge it” can turn solid financial ground into quicksand.
The trick to balancing a love/hate relationship with your credit cards is be frank with yourself about the ways credit cards can affect your finances. Turn their power in your favor by making the most of the features that work to your benefit while avoiding the drawbacks and pitfalls that work against you.
Reasons to love your credit card
Cash back With a cash rewards card, you’ll accumulate a nice little nest egg simply by using your credit card to make everyday purchases. Buy groceries; earn cash. Replace the athletic shoes the dog chewed; earn cash. What’s not to love?
Travel and rewards points Treat yourself by using a credit card that earns reward points or miles. Every time you use your rewards card to fill up the tank for the daily commute to work, you’ll inch that much closer to your dream vacation getaway. Travel not your thing? Choose a card that gives you rewards points toward a romantic dinner out or a shopping splurge at your favorite store.
Discounts and freebies Beyond reward points, many credit cards give you access to special discounts or benefits. You could be enjoying concierge service, travel insurance, roadside assistance and more just by being a card-carrying customer.
Convenience No cash? No problem. Go ahead and spend the night on the town with no cash in your wallet, or make the purchases you need just before your paycheck lands. As long as you’re paying off your current balance every month, a credit card is the same as cash in your pocket.
Reasons to hate your credit card
Credit card fraud Credit cards are just as tempting a spending opportunity for thieves as they are to you. Keep your cards safe with these tips for credit card security.
Debt A credit card in hand makes it all too easy to just keep charging it, and charging it, and charging it. Without a firm grasp of your budget, you could find yourself overspending and running up debt all the way to your credit limit.
Overpaying The unfortunate truth about credit card interest: If you’re not paying off your balance every month, you’re paying more money for every single purchase you make with a credit card.
Credit score woes Maxing out your credit limit or missing payments leaves an ugly ding on your credit score.
Inconvenient repayment schedules Plan ahead. Early holiday shopping could mean a big bill that lands right on top of the holidays, smothering all the fun, while last-minute shopping could leave you with balances that drag over the holiday and beyond.
Making bad times worse Unless you’re already keeping up with your credit card payments, using a credit card to cover an emergency can put you further in the hole. Instead, build a rainy-day fund so that financial emergencies don’t send you spiraling into credit card debt.
The best card for the way you spend
Stay on the right side of a love/hate relationship with credit cards by matching the way you spend money with the right credit card. Maybe you need a card without the complexity of additional service fees. Or maybe you want a card that helps get you out on the town with rewards points or off to the beach with travel points.
What’s the right credit card for you? Browse through the PenFed Credit Card Center to find a credit card that’s no hate, all love.