TEMPLE, Texas — Do you use credit cards, or do you steer clear of them?
According to the Federal Reserve, 242 million adults in the U.S., that's 93%, had a debit card in 2022, and 214 million adults, or 82%, had a credit card.
So, if you're going to have credit cards, why not get them working for you? When used responsibly, and the key word here being "responsibly", credit cards can really offer nice benefits and consumer protection.
"The ‘pro’ to using a credit card and running everything through a credit card is you get additional points or additional things through spending," Certified Financial Planner Rolandus Johnson told 6 News. "Hotel stays, trips. Spend enough on the card so much you may get enough points to pay off a huge chunk of the balance."
The key is to never make a late payment, so know when the due date is, and then know when your billing cycle starts over so that you are never paying any interest.
"I've got clients who run their entire lives through a credit card, and everyone seems to figure it out," Johnson said. "Now what I will caution you about is with credit cards, you have to be disciplined."
Not only can you earn points and cash rewards from credit cards, but you can have an expense ledger built right in.
"For business owners, it's a great way to keep track of expenses," Johnson said. "If you've got a CPA that you're meeting with, which everyone is usually doing that around this time, you can just pull the credit card statements and there you go. Hand them off to your CPA and then that's an easy way to keep things or keep expenses in line."
If you claim fraud, you usually have an entire billing cycle to figure it out to get your money back. If your purchase came from your bank, that money is gone until you can prove fraud.
"One of the huge pros for credit cards, and my wife gets on me all the time, is when you are out and about, that credit card and the fraud protection that comes with it, you are usually not liable for any of those expenses that come off of your card, wherein the debit card world where if you put that pin number in, you are liable for it and the bank is not going to give it back to you," said Johnson.
Now there's a pretty strong argument for credit cards, but if you carry a balance each month you are playing with fire. Most have interest rates between 19% and 29% of your balance, so it can be easy to see why as of December 2023, Americans collectively are holding $1.13 trillion in credit card debt. That's a staggering number and one that is the highest in American history. So please be responsible!
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