The Truth About Credit Cards


A credit card is a 30-day interest-free loan…

A credit card isn’t free money and it isn’t a free loan for life.

A credit card lets you buy that sweater, eat at your favourite restaurant, or buy a new couch 30 days sooner than if you had to wait for your paycheck.

Make Your Credit Card Work for You

If you pay off the money you owe on your credit card every 30 days, a credit card will actually make you money.

There are credit card deals out there right now that pay you 1-2% of what you spend just to use the card and charge no annual fee.

There are other cards that will pay you up to $400 as a signup bonus and all you have to do is spend money on the card!

Think Before You Spend

The next time you have that shiny Visa card in your hand and are thinking about going wild on Amazon, stop and think……

A credit card gives you an opportunity to prove to lenders that you can be trusted with money.

“Can I pay this money back in the next 30 days”?

If you can’t then wait until you have the cash. It will be hard at first but TRUST US, it gets easier and your entire financial future will be brighter because of it.

A credit card gives you an opportunity to prove to lenders that you can be trusted with money.

Put Yourself in the Bank’s Shoes

When you are accepted for your first credit card you are a financial stranger…

Companies that have money to lend don’t know anything about you.

They want to trust you but have no idea if you are going to take the money and move to Mexico never to be seen from again.

You are a potential source of profit for them, however, so they are willing to take a chance and loan you a small amount they can afford to lose, say $500.

Now if you run up your credit card balance and don’t pay back what you owe, do you think the banks are going to lend you more money to buy a house or even a used car…. Probably not.

Think about it this way, if you lent your cousin John, or a good friend $500 and they didn’t pay you back, that is probably the last time you lend them any cash right?

To the credit card companies you are that cousin or friend of a friend of a friend, so if you can show them you know how to handle money and can be trusted to pay back your loans on time, they will fall all over themselves to lend you large amounts of money later in life for cheap, just when you need it to buy your first house or a nice brand new car, or even to start your own business.

Even if you are able to convince the banks to loan you money for a house, car, or a student loan, but you haven’t been very good about paying them back, they are going to charge you thousands more in interest.

Money you could have used for your education, to renovate the kitchen, or more importantly, to save for retirement.

 

The Bottom Line


Credit cards serve a necessary function in society. They help the banking system figure out who can be trusted with a loan and who cannot.

If you use your credit card right it is the only type of loan that will actually pay you money to borrow.

Think of a credit card as an interview.

If you pass the interview (borrow small amounts responsibly), banks will happily give you the job (let you borrow hundreds of thousands of dollars later in life for a house, car, new business).