How to Effectively Use Credit Cards After Debt

How I plan on using credit cards going forward

If you haven’t followed my blog since it started nearly five years ago, you might not realize I came from a position of overspending and debt. When I started this site, I had just finished paying off the last of my credit card debt. Over $50,000 to be exact. This was on top of another $25,000 we had in consumer loans, like a JetSki, cars, and some personal loans. I battled that debt for four years until it was paid off. Every single penny!

During the entire debt repayment time, I got asked by many if I was going to stop using credit cards after they were done. I wasn’t sure how to respond. Some days I hated the credit cards for being in my wallet and then other times, I loved having the ability to use them if/when I needed them. Over the years after paying off the last of the debt, I’ve changed my thinking and attitude toward credit cards. Here’s why…

My Rationale About Credit Card Use

I get to have the unique perspective of someone coming from a large amount of credit card debt, so I know exactly what it’s like to struggle making the payments. Heck, at one point, my minimum monthly payments were more than my mortgage payment. Yes, that’s how bad it was.

So,when I say this, just know I’ve been there and I know how it feels to be under a mountain of credit card debt.

I don’t blame credit cards for my debt!

There has been some push-back over the years after I’ve said this during some interviews and other places when talking about paying off debt. I’m OK with that, but I feel that you can’t effectively blame an inanimate object for your debt woes. You just can’t do it. Just like you can’t blame a rock for your stubbed toe. You hit the rock by not paying attention. The rock was just there in your way.

The problem is too many like to place blame on the shoulders of others instead of placing it on themselves.

I fully took responsibility for my actions (or inaction in many cases) when it came to my debt. I applied for the cards; I shopped with the cards; I swiped the cards; I didn’t pay, but the minimum monthly payment with the cards. You see how each of those start with “I?” It was me people. I did it all. I still don’t think credit cards are evil.

That’s why I could never blame a credit card for my faults. Yes, I didn’t like the interest rate I had to pay the bank, but that was my choice too. They didn’t force me to sign up for them. They didn’t neglect to tell me how much the interest was going to be on any balances. That was all information I knew about beforehand.

So, my rationale behind credit card use after getting out of debt has been one that it’s not responsible for your money problems. You have to be and that’s the only way you can lead to change.

Trust me. I’ve been there!

Why I’ve Decided to Re-Think My Credit Card Use

You might not like where I’m going with this, but I have to say it. You also might not agree with it and that’s OK. You do what you have to with your money.

Truth be told, I’ve never stopped using credit cards. Not once.

For the past four years, I’ve just used credit cards when I wanted to. I only had a few that would give me some benefits if I used them. One of the key differences in using them now compared to when I was in debt is I only use them if I have the money to pay them off each month.

See the difference? Only use a credit card if you can pay it off each month!

If you don’t have that money, then you shouldn’t pull out the plastic and swipe it. You’re gong to be in debt.

Over the last year, I’ve started to shift how I use credit cards to a more strategic method. I have a lot of good friends who successfully use credit cards to gain points and travel the world for little to no money at all. I’ve been intrigued, but really haven’t jumped on the rewards train yet.

That was until I was preparing to take my family to England this year. If you’ve ever traveled internationally, you know it’s expensive. There’s nothing around it, or so I thought.

I was budgeting for the trip and decided to reach out to a few friends who are great with rewards credit cards. I asked them what I could do to lessen the blow of the money needed to be spent to take a family of four to England for a month. Yes, we stayed there for a month!

That’s when they opened my eyes to the real power of travel rewards credit cards. Oh, what have I been missing.

How to Use Credit Cards After Paying Debt

As someone who’s had a very high credit score his entire adult life, I can say that getting a credit card is easy for me. I’ve kept a 820 – 830 credit score ever since I was 22 and that as afforded me opportunities that others don’t get. If I need a credit card for a purpose, I can typically apply and have no problem getting accepted. That’s why it’s a good thing to have a high credit score. It helps you in more ways than one.

For this reason, I knew I’d be a good candidate for using credit cards to get travel reward points. The key to doing any of this is to make sure YOU CAN AFFORD IT BEFORE YOU BUY IT ON CREDIT!!

I can’t stress this enough. Don’t get pulled in with the allure of using credit cards to get a trip paid for, because if you don’t pay off the card each month, the rewards don’t outweigh the cost of the interest you’re going to pay. Simple as that.

If you have a problem with debt or purchasing stuff you want, but can’t afford, then DO NOT USE CREDIT CARDS! If you can’t handle them, don’t use them.

Over the past 10 years, I’ve been able to switch my thinking about how I view and value money in my life. I use it as a tool to achieve my goals in life. I no longer let it dictate how I reach those goals. If you can effectively use credit cards to help you reach those goals, then that’s awesome. Keep them as a tool, but never let them run your life. That’s when you get into serious financial trouble.

Credit cards aren’t for everyone, so I don’t pretend using them to earn rewards is a good idea for everyone. This is for those who have a handle on their finances and their spending urges. Plain and simple.

How I’m Using Credit Cards Going Forward

While I’m not a pro at using credit cards to maximize my rewards, I’m slowly learning the system. I got my first real taste with England when I was able to pay for nearly half of our entire trip with rewards credit cards. It equated to nearly $3,000 in paid travel credits, which is awesome when you can cut your travel spending in half by just using credit cards for normal spending.

My next adventure is going to be taking my family to Jamaica. This includes my parents and my wife’s mother as a thank you for all their support over the years. I was able to work a few deals with specific airline credit cards and a few other cards to batch them together to get a deal. I also signed up for the free rewards program through the hotel to save even more money. While I’m not going to be going for free, the cards are helping me pay about 60% of the total bill, which is awesome!

I plan on learning from my good friends over at Club Thrifty as they are expert travelers using credit card rewards. They know how to use the system and they do a great job. They travel multiple times per year while only paying minimal out of their pocket to do it.

I don’t plan on overusing credit cards to earn rewards. I will only buy what I need and what I can afford. Using credit cards for rewards is just that. Rewarding me for using it, but I still plan on paying mine off every month like I do now. I’ve paid off my cards every month since the last debt was paid off in 2012. Now, I’m just going to get some more benefits to using the cards I already own.

There will be some of you wondering why I would recommend credit cards on a debt blog. Well, this isn’t just a debt blog, it’s a personal finance site. We recommend actions for all types of people in all types of financial situations. If you’re in debt and can’t handle credit, don’t use it. If you have financial stability and control of your money, then using credit cards could work for you. This is just what I’m doing with my financial situation and I see credit cards as just tools in my financial toolbox. They are nothing else.

If I can use them to my benefit without costing me anything extra, then I’m going to do it. That’s how you get ahead in life. Use what you have around to get better opportunities.

Simple as that!

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About the Author Grayson Bell

I'm a business owner, blogger, father, and husband. I used credit cards too much and found myself in over $75,000 in debt ($50,000 in just credit cards). I paid it off, started this blog, and my financial life has changed. I now talk about fighting debt and growing wealth here. I run a WordPress support company, along with another blog, Eyes on the Dollar, which is another great personal finance blog.

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4 comments
Laura says August 1

Great post! We’ll have to look into travel rewards as well, though always hesitant to open up another credit card account. OTOH, given we don’t travel much, not sure we’d reap benefits from a travel card just w/ everyday spending.

Reply
    Grayson Bell
    Grayson Bell says August 1

    We didn’t travel much, but now we’ve caught the bug and the travel rewards are now coming in handy. There are also some good cash back cards, like we had one that would give us 6% back on groceries and 3% back on gas, which were our two biggest expenses outside of our mortgage and daycare. They were constant, so why not save on them?

    Reply
Oliver @ Appreneurinvestor.com says August 8

“Only use a credit card if you can pay it off each month!” Very powerful truth right there.

Sure, it’s great to get rewards when we spend with credit cards. But if you aren’t financially capable enough to pay everything on time, you can’t enjoy so much while worrying about increasing debt.

Reply
    Grayson Bell
    Grayson Bell says August 8

    Yes, I know not everyone can use credit cards effectively. That’s why there is so much credit card debt. But, if you can, there can be some good rewards to win!

    Reply
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