Credit Cards: A Double Edged Sword

This post was written by Johnathan Lee. You will find his information at the bottom of this page. He puts out some fantastic financial articles for military members. If your are in the military, go check out his website! If you are not in the military but you know someone who is and might benefit from his articles, share his website with them!

When most people think of credit cards, they immediately think of debt. This isn’t particularly surprising given that in 2020, the average person had $5,315 in credit card debt. While credit card debt is financially harmful if it isn’t paid – the APR on credit card debt is usually astronomical – credit cards aren’t always a bad thing. If used responsibly, they offer a number of rewards programs, build credit, and save you money. Let’s take a look at a few of the opportunities that credit cards offer. Remember – all of this is assuming that you pay your bill – IN FULL – every single month. Doing so prevents you from paying late payments and interest as well as reducing your credit score.

Perk 1: Rewards Programs. Have you ever walked past an airport lounge and wondered who was inside? Perhaps you’ve seen people who get points everywhere they shop – and talk about it constantly. Well… there is some value in having credit cards for the rewards programs. Credit cards offer everything from airport lounge access and monthly Uber credits to airline miles that you can use for flights. If you pay them off in full each month, they’ll help you save up for that vacation you’ve been looking for. Take a look at a few of the best cards available when you get a chance.

Perk 2: Saving Money. Ever thought about what it would be like to save 2% on everything you purchased or 6% on groceries? There are cards for that. Do you like $50 rewards to various stores? There are cards for that. Certain credit cards offer you the ability to save on every purchase that you make. The small amount that you save increases over time. Remember: Rome wasn’t built in a day.

Perk 3: Building Credit. One of my biggest regrets from when I was younger is not getting a credit card as an 18-year-old and making small monthly purchases on it. Why? Because length of credit history is one of the factors involved in credit score. If I had begun to use credit cards three years earlier, my score would be that much better. This one, however, can backfire if you don’t pay your bill every month. Another factor is payment history – and if you fail to make payments it hurts your score. Credit cards are truly a double-edged sword, but if used properly, they can help you effectively budge and manager your money.

Jonathan Lee is a Captain in the United States Army and runs the website www.militarymoneymatters.org which is aimed at increasing financial literacy in the military through education.

Published by Myranda Griebel

It is my goal to reach as many people as possible that need help, guidance, or advice with any aspect of budgeting so that they can work toward living the life they deserve and desire.

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