Apply for a better credit card
Before I encourage anyone to go out and get a credit card, I want to preface this article by saying that a credit card isn't for everyone. If you can't control your spending, then you should not get a credit card. Those that are responsible spenders can greatly benefit from a credit card because many cards offer rewards programs -- rewards for spending money on what you would buy anyway.
Benefits of a credit card
If you aren't completely sold on getting a credit card, you should consider some of the other benefits that may not be completely apparent:
- Build your credit - Responsibly using a credit card over time will build your credit, which will help you take out a loan for a house or a car at a reduced interest rate
- Rewards - Many credit cards will pay you cash back (typically about 1%) or other forms of rewards just for spending money. If you're going to spend money anyway, why not get rewarded?
- Consumer protection - Unlike debit cards, if your credit card gets stolen or you have a fraudulent charge, you can dispute any charges and not have to pay for them.
- Interest - Your money can accrue interest over the month before you pay off your card (about 29 days of interest each month) -- if you pay for things with cash or a debit card, you'll be paying for everything immediately and will not gain any interest.
A few obvious tips
There is a responsible way to use credit cards -- if you prescribe to the following tips, you'll be able to enjoy the convenience and reward benefits of a credit card without suffering from a high monthly interest payments.
- Make a budget and stick to it -- if you can't afford a purchase now, then you probably can't next month either
- Pay off your entire credit card every month -- no exceptions
- Don't get a card with an annual fee
My recommendation
Please keep in mind that credit card plans seem to constantly change and morph over time, so you should do your own research and find the best deal that works for you. Personally, I have been extremely happy with Chase, but I realize there are other credit cards that are comparable (such as Capital One and American Express).
The current flagship card of Chase is the Chase Freedom Credit Card, which gives 3 points at the three top places where you spend money, and 1 point everywhere else. Once you've collected 5,000 points, you can redeem your points for a $50 check in the mail (which translates to 1-3% cash back). On top of everything, if you apply for the Freedom card, Chase will give you $50 worth of rebates after you make your first purchase (although it takes 6-8 weeks to redeem the $50).
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