A few weeks ago I wrote a post about the modern day credit trap. In this post I clearly stated my concerns about credit card debt. Well, at the risk of sounding a bit like a hypocrite, I just get a new credit card.
This credit card differs from the other cards I’ve used because this is the first time I’m not using a card because I “need” the money. Instead, I’m taking advantage of “rewards” cards, which give you free things (in this case, airline miles) as you use them. The plan is to use it to pay for some expenses I already have (insurance, groceries, gas, etc). As long as I pay off the balance each month, no interest will accumulate… and I will also get the rewards that the card provides. I opted for the Capitol One Venture Rewards Card because I have used Capitol One 360 for several years with great success (they charge no monthly fees, plus there’s a convenient ATM I can use down the street for free).
The idea is simple enough. Yet I admit, I was a bit nervous about it, after so many years of dealing with an unpaid credit card balance, and accruing interest fees. I probably would never try this method if I hadn’t heard of tons of other people who do it regularly, and with great success. I feel reasonably confident I, too, can benefit from it.
As for getting the card, the application process was really easy, and took only a couple minutes online. All was well until I looked at my Capitol One dashboard the day after I filled out my application. I did a double take as I the new balance for my credit card, currently at $0, which had appeared right next to my bank account balance. I got a little uncomfortable, thinking, “That credit card balance is made to look like it’s a positive balance, like your checking account. As if it it’s your money. But it’s not your money… it’s what you owe!”
I took this experience as a reminder of what I’m dealing with: I didn’t get the card in order to fall into the trap of having what they call “a revolving balance.” In fact, the opposite. I will be a smart, disciplined rewards card user (God willing)!
As I was looking at my bank dashboard, I felt the internal warning sign go off. “Proceed with caution,” it said. And like a good devotee to frugality and sound personal finances, I nodded my head. “Preach, brother, preach,” I said to my inner voice of warning.
Meanwhile, I will rack up some free airline miles 🙂
A few miscellaneous notes:
Credit card companies will offer incentives, such as rewards cards, to lure customers. The rewards system only works for the customer if they are responsible about it and pay down their balance immediately. If they do not, it’s probably a better deal for the credit card companies, as an unpaid balance can easily mean more interest profits for them than the value of any of the rewards they offer.
As Brian Tracy points out in his book “Something for Nothing,” there really is no such thing as something for nothing. “Free” comes at a price. Credit cards dangle “free” and hide the price in the fine print.