There seem to always be numerous posts about credit cards with all sorts of varied opinions.  You can look at the facts posted by Kurt at Money Counselor. Some think all credit is evil, and we should burst into flames if we apply for a card. Some feel we should make all purchases with a credit card for ease of tracking finances and rewards. I fall somewhere in the middle. If you are smart and disciplined, you can make the best use of credit cards and take advantage of cash or merchandise rewards. I personally hate to spend money on clothes for myself. For the past couple of years, I have gotten almost all my clothes for free.  All I had to do was pay my bills on time.

Back in the day, our household did not have a healthy credit card relationship. At our lowest (or highest) point, we owed over $30,000 to Visa, Mastercard, AmEx , and Discover. Since then, we have seen the error of our ways and do not use credit for things we don’t have the money to purchase. When we used to apply for any credit card that was available, I signed up for an Old Navy Visa card.  I’m sure I carried a balance on it at a time much blacker than now. Now that I’m smarter, I  use a store card to my advantage. I realize that store cards can be a black hole, but if you use them correctly, some offer great rewards.

I don’t really enjoy shopping. I’m not sure if it’s the redistribution of flesh that comes after childbirth, or having to chase a five year old around the store while trying to find clothes, but I need one store that works for us. I don’t have the time or desire to visit that many places. Because I live in a town where the only people who wear suits are the DA and the undertaker, I can get away with wearing khakis or a simple dress to work.   Old Navy or Gap works fine for what I need, but you can find similar cards at other stores if those are not your cup of tea.

Pros of Store Credit Cards

• Takes less points to get rewards-For the Old Navy card, you get a $5 reward for every 500 points.
• Offers more points for money spent in their stores-For purchases in their stores, you get 5 points per dollar spent.
• Free shipping online-If you uses your card online at their site, you usually get free shipping
• Bonus offers-This is how I earn most of my points. It seems there is always some sort of special offer to get 1000 or 2000 points.  Sometimes, you have to sign up for promo emails. One offer gave 1000 points for using your card for any purchase within so many days.

 Cons of Store Credit Cards

• Higher interest if you don’t pay off your balance each month. Our interest is 23.99% if the balance is not paid in full.
• Can red flag your credit if you are applying for a mortgage.  This is true for any credit you apply for, but some people don’t think store cards count.
• You get email almost daily. You do get the bonus points, but you also have to contend with lots of emails.
• You might be tempted to buy more. If the store is offering some sort of bonus for using your card, you might be tempted to buy something you don’t need to get the reward.

In our case, we use this card to pay most of our monthly bills; electricity, gas, internet, and TV. We also use this card when we travel or need to make a household purchase. Between those expenses, I usually get around $200 a year, which covers my work clothes budget. If I didn’t work, I’d probably wear old T-shirts and sweats every day, so it’s probably good that I have to dress up for something.

Of course you can use any reward card this way and get cash back, but with what little we put on credit now, it would take a long time to get any sort of reward. Usually you need 10,000-25,000 points to make it worthwhile. It would take a few years for that to happen in our house. I do still have my business credit cards until I sell my office at the end of the year. It rakes in the points because we put all of our business expenses on it. We usually use those points as cash back when we go on trips.

The key to any credit card is discipline. If you know you will spend more by having a credit card, then don’t have one. My husband doesn’t feel comfortable with one. He did have one weak moment during our debt pay down when he had a relapse and made a stupid credit purchase. Since then, he has given me all of his credit cards to hide. Now, he only uses a debit card or cash for his personal spending. If you can’t pay off the balance in full each month, then you really shouldn’t use a credit card, no matter how many points you might receive.  Whatever your motivation for getting a credit card,  choose one that meets your needs and offers the best rates or rewards. If you are unsure, there are many sources of information. Check out Modest money’s Best Credit Card Offers to start with. For me, paying bills with a credit card has been a great way to get free clothes.

Do you use credit cards for rewards? What is your favorite thing to use credit card points for?

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