I'm so excited. Dave and I both received our Chase Sapphire rewards card today!!
Yes I know it seems really silly and rather irresponsible to be so enthusiastic about receiving a credit card but I've talked about this before. There are a lot of benefits toward having a credit card (something that both Dave and I were grateful for recently when we wanted to dispute something). For those of you who are interested in getting a first credit card, I would not recommend this particular one. Although the annual fee is waived for the first year, there's really no point to paying an annual fee for any card unless the rewards outweigh it in the end. Also, the interest rate on this card could be totally lower so for many who aren't used to making purchases on a credit card a low or 0% interest rate is far better. It's so easy to get in over your head in the beginning.
However, by the time I graduated from college I had already learned my "credit cards are awful if you don't use them properly" lesson. Upon leaving college, my student card that started with only a $500 limit when I turned 18 had now reached more then $10,000. I clearly didn't use it properly. I placed the bills I couldn't afford on it at first like car repairs and things of that nature. Then there was trip to Disney, books for classes, more car repairs, and then many small miscellaneous purchases as my childhood savings ran out and the money from my job primarily went to paying off the minimum payment. Finally, all the amazing and fun activities down in Costa Rica were placed and by the time I got home I was in totally over my head. Paying for the interest consumed almost half of my minimum which was now close to $250 and it felt like my balance was never going to go down.
I was extremely lucky because my mother was willing to take a loan through her work with a super low interest rate and volunteered to pay most of the balance. It's been almost 5 years and finally at the end of this year, it will finally be paid off. People, this is exactly what you're not supposed to do when you have a credit card. Like I said, I was super lucky to have a mother who had the means and the willingness to help me out. In addition, I'm incredibly lucky that I learned that lesson at such a young age. I see people in their fifties at my job who are more than struggling. So why, after all that, would I be so excited about receiving another credit card? There are multiple reasons with the biggest being that I know how to use it.
Today, my motto is "treat your credit card like your debit card only instead of it coming out as you make the purchases, one large lump sum must be paid at the end of the month - in full." Yes, "in-full" is absolutely critical. When you pay your credit card off in full at the end of the month, the credit card companies make no money off of you because they can't charge you interest. In fact, if you have a quality rewards card, they end up paying you. So today, before I make a purchase I ask myself, "Can I put this on my debit card and still have plenty of money to pay my bills?" If the answer is no, then I can't buy it, no matter how much I love it. That's really it. It's just that simple.
Like I said before, this card has extra benefits. In this case, for every $1.00 Dave or I spend on anything, we earn 1 point. If we spend $3,000 in the first three months, which we will (yay wedding), we get 25,000 bonus points. Any airfare or hotels booked through this card's website earns double points (honeymoon). Because we have a wedding coming up, we are going to earn a boat load of points on the same purchases we would've made anyway. We can then cash in the points for travel, entertainment, cash, dining. Extra bonus, there are no black out dates or expiration dates on the points. How do the points transfer? Well, if we just earned the 25,000 it would be equivalent to $250. That's easily airfare for a weekend trip to Disney that we won't have to spend.
Again, all of this only works if you are able to pay off your balance in full and everyone thinks they can when they first get a credit card. If you've never had one before, get a no interest card and practice for at least a year. Then once you fully trust yourself and you have a small cushion in savings, then think about upgrading to a card like this. I will let you know how it all works out as I use it. Happy Spending!