First, you must define the term “debt”. There’s Good Debt and Bad Debt.
Your home mortgage is a good debt. You are building equity with your monthly payments.
You just have to be smart with your credit cards.
If I had a choice is paying cash or credit, I’d rather hold on to my cash and cash reserve.
Make money with credit cards
Pick and Choose your credit cards wisely.
Here are some of the benefits of credits cards (some with and without an annual fee):
- some give 1% cash back. great for a small business, or even a small computer shop where you have to buy goods to build them
- gives air miles points
- extra $100K insurance if you book your flight with the credit card
- decline car insurance when renting cars
- offer extended warranty on the stuff you buy on top of the manufacturer’s warranty
- Cash and credit cards get stolen. Bad things happens. With a credit card, you are protected.
Granted, some of these are Gold or Platinum cards, that can cost up to $120 per year. Just make sure the benefit you receive is worth more than he annual fee. Otherwise, go for the no-fee 1% cash back credit card!
There is really one catch to all of this.
You have to pay your balance in full.
Otherwise the interest, anywhere from 10-36% will ruin any of the savings outlined above.
If you can’t pay it in full, then the only option is a partial payment
If you are struggling to make that minimum payment, heaven forbid taking a cash advance from another credit card
I don’t understand why the government doesn’t crack down on credit card companies. It really is loan sharking at it’s finest.
It has to stop with you, the people who use them.