Putting Credit Cards to Work for You

Credit cards can be extremely beneficial to individuals and even small business owners. Then again, many can tell or have at least heard of one credit card horror story. Either way you look at it, a responsible and well disciplined person can use credit cards and their perks to their advantage.

Credit Cards
Photo by Ian Britton via FreeFoto.com

Benefits of Credit Card Usage and Good Credit Score

One of the most beneficial aspects of credit card usage is your credit score. So how can a high credit score work for you?

These days, interest rates on auto and home loans can be highly affected by your credit. It is simply amazing how raising your credit score just slightly can save you a bundle of money.
Also, insurers may base their coverage and premiums upon your credit score. An insurance company may decide not to provide you with coverage if your credit score is too low. The insurers choosing to offer someone coverage with a bad credit could raise your premiums.
With a good credit score, the average consumer can even save money on utilities.
Interestingly, even one’s ability to get a job can be affected by credit. Say an employer looks at you as a potential candidate for a job and realizes that you have bad credit. Even though you have all the qualifications and fit the job description, the employer may look upon your bad credit as a reflection of how you will handle your job and decides to hire someone else. Good credit could have helped you get the job and the salary you were hoping for.

The Perks

As you might have noticed by the frequent advertisements for credit cards, there is a lot of competition in the credit card industry. To bring in more customers, credit cards are offering more perks and incentives. Sometimes careless consumers get more in debt using these cards. However, for those that handle their credit responsibly, these perks and incentives can go a long way.

Some of the more common perks given by many credit cards include cash back, travel rewards, and discounts on certain services and merchandise. With cash back, cardholders receive a specified percentage of money back on their purchases. For example, some Discover cards give 5% cash back on categories such as travel, home, gas, restaurants, movies and more. The Discover Open Road card not only gives you cash bask on gas, but also on automobile maintenance.

Many other cards offer cash back no matter what the purchase may be. So who couldn’t use some cash back on their purchases? The Blue Sky from American Express allows cardholders to redeem points for savings on airlines, hotels, rental cars, and cruises. Many credit cards allow you to simply receive automatic discounts at their partner companies. Bank of America offers earnings on all Bass Pro Shop merchandise purchases and all other purchases at Bass Pro Shop stores, catalogs, and website. If you shop around, you can easily find cards with automatic discounts or earnings at places you enjoy!

While many of us are very familiar with the common perks and incentives offered by credit card companies, many are not aware of the not-so-common ones that can work for us. Many Visa and MasterCard credit cards offer purchase protection. Items purchased with their card will be protected if they are stolen or damaged. Interestingly, Citibank offers calling benefits on several of their cards. Many people are not aware of travel assistance, roadside assistance, rental car insurance, and even lost luggage insurance that many card companies provide.

Another way you can let your credit card work for you is by restoring poor credit. Most, if not all, credit card issuers will report your payment history to the credit bureaus. This means if you make on-time payments every month, there’s a good chance your credit score will improve.

Business owners can also put their credit card to work for them. Many business cards give extra cash back on all business purchases as well as cash back on regular purchases. Business credit cards enjoy most if not all of the common perks that personal credit cards provide. Business credit cards can also track expenses allowing owners to see where exactly their money is being spent. In addition, business owners can assign cards to key individuals within the company.

We work enough. So take a load off, and put your credit card to work.

Please visit Credit Withdrawal for an excellent Rebuttal of Putting Credit Cards to Work for You.

14 Comments

kev
November 16, 2007, 8:10

Another way a bad credit score can impact your getting a job is it sends up a red flag that you could be compromised. For a government job, for example, bad credit indicates you may have money issues and could be bribed by a party interested in stealing government information.
Yet another reason, if you needed one, to have a good credit score.
***
All that said, I hate the idea of the average person using credit cards just to improve their credit score. Credit card companies FEAST on the average person!
Yes, those who are knowledgeable and disciplined can use credit cards and get lots of perks out of them. Potentially, they are a great tool.
But then again, so is a chainsaw. In the wrong hands, a chainsaw is deadly.
Money Blue Book
November 16, 2007, 9:56

I’m a huge proponent of using reward credit cards. I know it’s not for everyone, but in the right hands, one can save a lot of money by earning cash back and reward points.
I can never seem to convince the skeptical however. I think most people see credit cards nowadays as inherently evil!
-R
louise
November 16, 2007, 14:21

I didn’t realise that in the US employers can access your credit score! here in Aus most people would find that a gross invasion of privacy.
My financial situation is not my employers business at all and has nothing to do with my ability to do the job. Isn’t this discrimination? (just trying to understand how it works over there)
Pinyo
November 16, 2007, 20:44

@kev – You made good points there. I like the chainsaw bit, we call it two-edged sword in my neighborhood.
@ray – I am too, but if anyone as my conditions to use credit cards are (1) always pay in full each month, and (2) no annual fee; otherwise, there’s no reward good enough to offset the finance charge.
@louise – it’s not universal, but some jobs that require high security clearance, or deal with a lot of money do a more extensive background check.
Lynnae @ Being Frugal
November 16, 2007, 22:09

I would love to be responsible and disciplined enough to take advantage of a rewards credit card. But I’m not, so my cards stay parked in the freezer.
the girl
November 17, 2007, 7:54

I wholeheartedly agree.
I put everything (groceries, electric bill, property taxes and the occasional Dunkin’ Donuts coffee, to name a few) on my credit cards to take advantage of rewards, and I pay them off every month.
The very important thing to remember, too, is that people with excellent credit pay less when they have to borrow – a frugal person’s nirvana!
Randall
November 17, 2007, 7:57

Louise – In the U.S. the employer has to get permission to pull your credit report, it’s pretty standard stuff. It’s like Social Security Numbers, you don’t HAVE to give them out on a form, but if you don’t, they pretty much eliminate you automatically.
No permission for credit check = no job interview (sometimes).
Eric
November 17, 2007, 8:07

We love our rewards credit card. We save up all our points and then buy the most cost effective gift cards we can with them. We use our credit cards extensively to earn as money points as possible. We just have to keep ourselves incredibly disciplined not to leave a balance on them.
I have never really looked at the purchase or rental protection options on the cards. I’ll have to read how those work…
Ryan
November 17, 2007, 19:58

That’s great Lynnae. Most people are not capable of admitting that while being disciplined enough to keep credit cards out of your reach.
Stephen did a great job outlining the benefits and perks credit cards can offer those who are disciplined. For others, unfortunately, credit cards can ruin them.
Pinyo
November 18, 2007, 21:26

@Lynnae – if that works for you, I think it’s great.
@the girl – right on. I try to do the same and since I pay a large portion of my bills with reward card, I am getting quite a bit of cash back.
@Randall – thank you for adding that clarification
@Eric – you just reminded me about another rule: “If you have the tendency to spend more on credit card than cash, then you should just stick to cash.”
@Ryan – thank you for your comment.
susan
January 19, 2008, 3:23

Stephen, your thoughts on credit cards are really nice, and i appreciate that. But sometime if we are in hurry to choose a card then instead of getting the right one we might face something else which was not expected. And about the perks, yes i have to be agree with you. Which ever credit card you take you will get the rewards surely. anyways, thanks for such a nice information.
Chris
February 8, 2008, 6:34

I love to reap the benefits of rewards cards. I have a home business and use them for everything. With business spending the rewards ad up pretty quickly.
The key is, like everyone is saying…Pay them off every month or you will just be wasting money in fees.
Make Friends, Earn Money
April 22, 2008, 3:44

I generally steer clear from credit cards where possible, although I do have one. I like what you are saying about the disciplined use of them and I think that this is a responsible point to make. Cash back deals are good but ONLY if you know exactly what you are doing but I wouldn’t advise using a credit card just for this purpose.
DebtGoal
April 20, 2009, 19:03

Credit cards can clearly be used to one’s advantage. The problem is the temptation to overspend. If one takes an honest, hard look at oneself and sees that they are going to be so tempted, then the risks associated with holding onto the cards are greater than the potential gains from “making them work for you.”