If you don’t have one, PLEASE open a credit card.
A personal finance blog begging you to OPEN a credit card? For some, this plea could seem contradictory. I should also start by saying this message is more geared towards those of you that have some sort of reliable income, and are still using your debit card / bank account to pay for all of your expenses. (If you do have a credit card good job, now read the rest of the blog and see if my referral credit card bonuses are worth signing up for yourself at the end of the blog)
A recent study from the Motley Fool, found that nearly 30% of adult Americans still do not have a credit card account.
My theory as to why this is stems from a belief that credit cards are dark holes that lead to financial debt and insecurity. I recently discovered that there is an almost cult-like following to Dave Ramsey, who is notoriously known for hating on credit cards, and basically any form of debt. I strongly disagree with Mr. Ramsey, and although the man has been incredibly successful in the space of financial advice and talking about money behavior, let me explain why you should side with the BonkerBeat on this ~thrilling~ debate.
(The look on Dave Ramsey's Face when he gets smoked by the BonkerBeat)
The primary argument for those bashing credit cards is that few people have the self-discipline to keep their spending in order, and they will inevitably find themselves in high-interest credit card debt that they never will get out of, which will tank their credit score, resulting in never being able to buy a house, and die alone in a sad dark hole in a forgotten decollate island somewhere in the middle of nowhere never to be seen or heard from again.
Okay, okay, that was a little much. But you get my point. The fear is that people cannot control themselves. And I guess for some- this is true. But if you are able to control your spending and pay your bills off in FULL every month, credit cards will work in your favor.
You see, credit card companies bank on the idea that you will fall victim to over-spending, and use your credit card for expenses that require you to use the INTEREST on the credit card. BUT, if you use your credit card only for your regular living expenses that you would have spent anyway, keep your spending in order, and pay off the bill in full every month, you will never have to pay that high level of interest. You will begin to receive cash back from your credit card provider, earning rewards for your excellent financial behavior. These cash-back rewards differ from card to card, and many offer unique benefits like higher % back on things like groceries, gas, travel, and shopping.
I personally only have 1 credit card currently, the Discover Chrome card, which gives me 2% back on all of my expenses. So if I spend $1,250 a month on my credit card, over the course of the year I will spend $15,000. At the end of the year, I will have $300 in cash I can pull out of my Discover statement, which I do every year to help pay for Christmas presents. This isn't life-changing money, but it's $300 you didn't have before if you were just using a debit card!
Another big perk of opening a credit card can be up-front rewards cash when opening a new account. These types of rewards can offer you sometimes up to $1,250 just for opening the card! The thing you need to be careful for on these types of cards and promotions is that they almost always have annual fees associated with them, and come with large spending goals you need to hit in order to be paid out the initial cash bonus. So be sure to be aware of when the annual fee hits, and also what types of expenses you will be making to hit the spending goal. Are these expenses you would have had anyway? Or did you just go a little crazy on Instagram shopping ads that you didn't really need?
My advice on these types of cards and rewards programs is to only open them when you know you have a big trip or event coming up that you know you will be spending money on. My girlfriend Amanda and I recently went on a road-trip through the South and before heading out on our adventure, we opened a Chase Sapphire Rewards Card, and used it to pay for all of the hotels, gas, and other expenses on the trip. We also shared the card for all other living expenses over the last two months like groceries, car maintenance, and going out, and were able to hit the spending goal for $4,000 in 90 days with no issues or unnecessary purchases. Once we reached the spending goal, Amanda received a $600 cash bonus, which covered all of the hotels on our roundtrip!
If used correctly, opening credit cards can be excellent ways to help bolster your credit score, earn additional cash back on regular purchases, and assist in paying for upcoming trips and larger expenses!
I have below referral links you can use to open the credit card I use, the Discover Chrome, as well as the Chase Sapphire Rewards Card that Amanda just opened. The Discover Chrome is free to open, and you and I both will receive $50 when you an open an account using my LINK.
The Chase Sapphire Preferred Rewards card has annual fee of $95, but has an insane deal going right now. Check it out:
I recommend the Chase Sapphire if you have any trips or big events coming up! $1,250 bonus cash is AWESOME! I have a link for the full list of benefits with this card below here as well. (Be sure to use THIS LINK or the LINK BELOW to open this card. You and I will get an additional $150 for opening the account through a referral!
Chase Sapphire Preferred ($150 referral bonus+ $1,250 rewards cash when you sign up using THIS LINK)
Chrome Discover Card ($50 Cash Bonus when you sign up using THIS LINK)
Also- last week I dropped some merch on the BonkerBeat store if anyone here is interested in supporting me and the blog. Please feel free to message me or comment on my posts if you have any feedback for the merch! I would greatly appreciate it.