Yes, credit has officially dethroned cash as king in America. I know, I know… You’re thinking I’m out of my mind right now, but hear me out. In today’s economy there are very little things that using cash will save you more than using credit. We all have realized by now that the better your credit score is, the better the terms of credit you’ll receive from lenders.
We’ve been taught for generations now that cash is king and will save you the most money. Sorry to inform all my strictly cash buyers out there, but that’s no longer the case. Today’s world is rapidly speeding toward a digital society and the exchange of actual paper currency is becoming a lost art. Plus money is just dirty anyway, you have no clue where its been before it touched your hands!
So I’m making another list for the sake of informing you how credit has become king. I’ll also provide you with some helpful tips to help you save the most money. Without further delay, here are 4 ways credit is now king.
1) Cash Back Cards
Have I ever told you guys how much I love these cards? Well if I haven’t, I absolutely love these cards! Like I love these cards so much that my wallet is full of them! I love them so much that I personally have 5 of them! Oh, and I’ll be adding more over the years.
Anyway, cash for everyday purchases is on life support because of this new phenomenon called cash back cards. If you use these cards properly then you can honestly save a large amount of money over a years time. We personally saved $1,000+ in 2016 by using these cards over cash. Yes, I actually said over a thousand dollars saved by using a credit card over cash.
That’s because these cards give you 1% to 5% cash back on all of your purchases. Then when you pay them off in full every month, you don’t get charged a penny in interest. Therefore, a little bit of discipline and receiving at least 1% cash back for every item you buy over a years time equals huge savings for just swiping a credit cards!
2) Specialty Cards
So for those that are wanting more than just 1% to 5% cash back and do the majority of your spending on one thing or one place, these cards are for you. These cards are geared more toward people who fly a lot, are living in and out of hotels, or buy with one specific merchant on a regular basis. You’ll be doing yourself a huge disservice if you didn’t have one of these cards!
If you have a travel rewards card, such as the Chase Sapphire Reserve, you’ll be racking up a ton of free miles and travel rewards points just for booking your travel with the card. You’ll also be saving money by not paying for TSA services and memberships to airport lounges because they’re complimentary with the card. This will result in saving thousands in just free membership perks alone.
Store cards save you money over using cash in a similar way, but only in discounts for the clothing. For simply using your store card on things you’re already going to buy you could receive a 20% discount, plus earn rewards, along with higher coupon discounts. This could result in you paying 50% less or more than if you used strictly cash to shop at said store. I’ll call that a win every time! As always though, remember to pay off that balance in full every month. You don’t want to end up paying more by not practicing discipline.
3) Sign Up Bonus & No Annual Fees
This is exactly why I have so many credit cards! I’m a sucker for the sign up bonuses, they get me every time! Well almost every time, I do know how to say no until the current sign up bonus expires. Then I’m back on the hunt for the next great offer.
By now you’re probably wondering what’s so great about sign up bonus and annual fees. Well I’ll finally get to it then.. Sign up bonuses are these amazing perks you receive for a limited amount of time for being approved for the credit card. Usually they come in the form of a great percentage of cash back that you’ll never receive by using cash to pay for something. Take my Discover It card for example. I’m receiving a match for every penny in cash back I earn over the first year of having the card. This is a rate of savings on everyday purchases that just simply can’t be matched by using cash.
The best thing about bonuses is that cash back isn’t the only perk. You also have several cards that give you 0% for a certain period of time. So you may have 15 months of no interest to use the card before even a chance of paying a penny in interest. Now add no annual fee into the equation. You have a recipe for savings galore!
Now this is the ultimate goal we all want to acheive. We all want to have our assets produce more returns than our liabilities, but it’s hard to learn how. It’s also hard to get started appropriately, it’s not impossible though! This is what cedit is for! Using credit for certain purchases, such as real estate, will allow you to invest the same cash you would have used to purchase the land and take advantage of the potential gains from investing those funds.
The trick to making this successful is getting the right interest rates. If you can get a line of credit, loan, or some other type of credit source that’ll charge you a lower interest rate than the gains on the cash being invested, then you’re golden. Thats because you’ll be producing a positive net on the cash investment, you’ll also have the returns on the real estate investment, and you’ll still have the cash to pay off that loan if you need to earlier than planned. Now your cash is really working for you and you’ve turned that cash into 2 income streams instead of just one.
Now this isn’t for the beginning investor and people new to credit. I also recommend you consult with a financial advisor before implementing this strategy as well. It’s very easy to make a mistake and have all this backfire on you. So start small, work hard on educating yourself and your business partners about this technique, and make sure you have a quality financial advisor to help guide you through it.
Find The Right Approach For You
You need to figure out which card fits your lifestyle and will help you maximize your cash back. If you’re always on the go and a jet setter then you need a travel rewards card. If you just back everyday purchases and your family lifestyle is similar to mine, you need a cash back card. If you’re always shopping and known to be a fashionista then you need a cash back card along with a store card to your favorite retailer, I personally have an Express store card and my wife has one to her favorite store as well. Love getting those $15 rewards, double points, and $40 birthday coupons, thanks Express!
As far as the liquidity approach, practice with extreme caution! The use of this technique is for those at the expert credit usage level. Not sure that makes any sense, but you get what I mean. This is by no means for the rookies of credit and those who are still finding to using credit properly. Basically you need to be at the pro level. Okay? You got it?
At the end of the day, learn how to use credit properly. This can literally save you thousands and potentially make you more. Also, stay tuned to my blog for more helpful tips and don’t forget to share!