Credit Cards - Use Them Wisely!

Credit cards can certainly be a boon to your home based business and other home office activities - IF you use them wisely. Too often, the American way of life gets in the way, and we become conditioned that we have to have everything NOW. The trick is to utilize a card's advantages without having to pay the heavy prices of interest, late fees, and other card related expenses.

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Choose a card with rewards!

Any time you choose a card, you want to make SURE that it has a rewards program. A few years ago, many card companies started reward programs that included points for catalog purchases, airline miles, and even cash back. Choosing a card with a cash back reward program is the best home office idea because you can use the cash you earn in your household or home office spending to buy things you need. Many cash back programs have no limit to how much can be earned back, while airline and other points programs do! Check with the offer from any card you are considering before signing up!

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Pay it off - EVERY MONTH!

Of course you want to make sure you pay off your credit card EVERY MONTH! This means that you will avoid the trap that millions of Americans fall into every month - making mininum payments and accruing huge interest payments, late fees, and the like. You want to become what the credit card companies term a "dead beat". This is someone who pays off their card every month and never pays interest or other fees. Don't worry, the card company still makes money off of the retailers you shop through - but they don't make any money from you, and in fact are giving you rewards to use it!

You may think this is unrealistic but in the U.S. our national savings rate is -5%! In contrast, an average Chinese person saves around 40% of their income - one reason why the Chinese economy is so strong. Use good budgeting techniques and hold off on those purchases until you have the money to pay for them. Once you have the money, by all means, buy it with credit - but pay it off in the same month! You'll see your credit score go through the roof too!

Run all of your monthly expenses through your credit card!

Most billers, including the power company, the cell phone provider, your local grocery store and gas station, can be directed to be paid from your credit card. If you can manage not to overspend, this is a highly effective way to build cash back, as well as tracking your spending every month. If you spend $5000 per month on gas, groceries, utilities, clothing and entertainment, this would add up to a $600 cash back reward at the end of the year!

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Choose a card with excellent tracking!

Make sure that any card you use can download directly into Microsoft Money or Quicken. This will allow you to track your expenses on a day to day basis - your transactions will appear in those applications within hours of your spending, allowing you to track exactly how much you are spending!

If you choose a card with all of the features above, and you apply some basic budgeting, you won't have to worry about what the interest rate on the card is, because you will never be charged interest!

Make those credit cards into a convenience for your family and your home office instead of a liability - you can do it!

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