For many credit cards are instruments of destruction. This is as a result of years of credit card bashing perpetuated by financial experts in their bid to help their clients get off credit card induced debt.
The reality, however, is that credit cards are not the problem. In fact, the smartest consumers know that it is a good thing to be credit card lovers as long as they don’t carry a balance.
When you don’t carry a balance, you won’t have to worry about accumulated interests and fees.
This is when you can enjoy accumulated rewards, a major benefit of proper use of credit cards. This piece shows examples of people who have understood how to utilise the credit card rewards system and enjoying it to the fullest.
Public Case Studies on people who used rewards effectively
Greg Haney is a financial analyst that uses credit cards for all his day to day spend. His eyes were opened to the benefit of credit card rewards following his first credit card.
The card rewarded him 1% cash back on all spending after paying off balance for the month. This meant he was getting free money for buying things he needed.
He has maintained this approach with over a dozen cards, using the rewards to fund trips around the world. You can read more about Greg Haney.
DaraiusDubash, a former accountant, made the headlines with his story of embarking on trips worth over $195,000 whilst spending under $15,000.
His approach is different from Greg Haney’s cash back approach but the end goal is to take advantage of rewards.
His method, known as “churning” involves signing up for multiple credit cards in a bid to take advantage of lucrative sign-up incentives.
Daraius and his wife have travelled around the world using rewards accumulated in this manner. Here are the full details on his story.
Rewards hunting and your credit rating
Having a high credit card turnover and carrying many cards at once generally dents your credit rating. If you look at the examples above, however, you will find that their credit ratings have been boosted instead, if you read their stories.
Rewards hunting, when done properly and intelligently is good for your credit rating because clearing your balance monthly on a variety of cards shows top level financial prudence.
Also, having more than few credit lines actually increases your credit to debt ratio. a number which is derived by deriving your outstanding debt from the total of credit limits across your cards. This is a big factor in determining the credit score.
Mastering the credit card rewards system involves using credit cards for every purchase possible, meeting the spending minimums and paying off balances in full every month.
Your credit ratings will be better for it and you will no longer dread credit cards but, instead, see them as vital tools in your financial planning.
Readers, what’s your credit card reward strategy? Do you keep multiple cards and use them to maximize your rewards?