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A few weeks ago, I wrote about some increased offers on the Chase Southwest Rapid Rewards cards. I shared the post in a few local Facebook groups I belong to that allow business posts.
One social media reader commented: “Or you could not pay interest on every purchase you make and with that money just buy a plane ticket.”
I realized that not everyone lives and breathes credit cards like I do. Some people fear credit cards or are misinformed about how they work.
Why Credit Cards Aren’t Evil
Dave Ramsey, the personal finance guru, hates credit cards. He thinks they are evil tools of consumer debt. I’m a big fan of Dave Ramsey, and he’s not completely wrong. Many folks cannot handle themselves around credit cards. They spend more than they can afford to pay off, so they end up paying interest charges.
However, credit cards don’t have to be evil instruments of debt. Most major credit cards have a payoff grace period of 20-25 days. If you pay your statement balance in full by that due date, you don’t pay any interest or fees. It’s like a 0% loan. If your credit card has travel rewards, you accumulate miles or points for just buying things that you pay for a month after you purchase them.
You Need Discipline and Organization
Credit card companies are counting on you to screw up. They are banking on you becoming envious of your neighbor’s new gadgets and buying them for yourself, even though you may not be able to fit the cost into your currently monthly budget. Credit card companies are counting on you to be impulsive shoppers who cannot pay off their balances in full each month.
But, if you want to succeed in this miles and points travel hobby, you have to be smarter than the credit card companies. You have to have the discipline to only charge what you can afford. You have to stay organized to know what’s in your monthly budget and the timing of your monthly payment due dates.
Honestly, the interest rates on credit cards that earn miles and points are not good. They are terrible. But, you must make them irrelevant by being responsible with your purchases. If you pay off your balances in full, the interest rate doesn’t matter.
Bottom Line
I feel like I repeat myself on this blog a lot with this advice, but I’ll say it again: Pay off your credit cards in full each month. Then, you can accumulate miles and points from credit cards guilt-free and travel farther and more frequently than you would if you had to pay cash for everything.
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Author: Nancy
Nancy lives near Dallas, Texas, with her husband and three kids. Her favorite vacations include the beach, cruising and everything Disney.
Nothing wrong with paying your CC bill as you go. And you’re right, it is “extreme”. It’s unusual. It’s weird. And as Dave Ramsey says, if you’re being weird with your finances, you’re probably doing it right. Normal is overspending. Normal is paying interest. Normal… is broke. Stay weird.
Probably a bit extreme, but I pay my balances every few days, basically as soon as the changes post. I find it really stressful to have a big balance I pay monthly. This works for me.
Charges
@Jennifer I know several people who do the same!
I feel like I was in the same boat with credit cards, believing that the interest kicks in soon as your bill posts.. so I paid them in full before each cycle ended and had a 0 balance when it did post.
@Jinxed_k My husband had an old credit card years ago that for some reason started accruing interest right away! We got rid of it. Most credit cards now give you 20-25 days, but definitely check the fine print.
I think the dirty little secret in this game is that people do carry balances. Every once in a while one of the bloggers will write a “life happens” and you have to carry a balance. I suspect this happens far more often than hey admit.
@Steven You might be right. We’re all human. I’ve paid interest/late fees 2-3 times when I’ve forgotten to set up a new credit card with online billing. I’ve used a 0% card to buy something before I wanted to fork over the money. I think the dirtier little secret is that some bloggers don’t use miles/points for all their trips, but make it seem like they do. When the Chase 5/24 rule rolled out, I was surprised that some bloggers weren’t affected by it because they didn’t have that many credit card apps.
One social media reader commented: “Or you could not pay interest on every purchase you make and with that money just buy a plane ticket.”
so what was his/her reaction when he/she was told that credit cards don’t work that way?
It’s amazing how people can be so wrongly informed about credit cards. It’s such a basic financial knowledge that even my 12 year old understands.
@tjp74 The person didn’t respond to me. Thats ok. I think for some, credit cards do work that way. They charge a lot of expenses, and just keep paying on them forever. But as you know, it doesn’t have to be that way. Credit cards can be great tools if you use them responsibly.
If you set all your credit cards to autopay, how would you ever end up paying interest?
The only real complaint about credit cards should be from the merchants.
@Hao In theory, yes. With autopay (assuming it’s set to statement balance), there is always a risk people won’t look at the total amount and their bank account won’t have enough to cover the entire balance. Also, many Americans don’t pay their entire balance each month but have autopay set to minimum payment or some other amount.