Optimizing your credit cards
Issue date: 8/27/10 Section: News
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Unfortunately, most of the financial advice avaliable is rife with misconceptions. It seems everyone has an opinion on the best way to handle money. People debate which hot, new stock they are going to buy, or which investments will provide the greatest return. This information overload tends to make people do the worst thing possible with their finances: nothing. But fortunately, most finances can be handled smartly with an understanding a few simple concepts.
The first of these concerns optimizing your credit cards so that you can take advantage of credit card companies as opposed to them taking advantage of you. Some people avoid credit cards because they think it will cost them money. However, not only can they cost you not a dollar, but they can actually save you money while boosting your credit score.
Here are the top three reasons you should use a credit card:
1. You can build up your credit score. Your credit score is a number between 300 and 850 that represents how risky you are to lenders (higher score = less risky). By using a credit card responsibly, you demonstrate to lenders that you are a low-risk customer, and you will get more favorable rates when taking out a car loan or mortgage (this could save you tens of thousands of dollars in your lifetime).
2. You are able to track your spending. Using a credit card will help you to be more conscious of your spending habits, which is a great first step to saving money.
3. Credit card companies offer rewards, lots including cash back, discounted travel, and concierge services (explained below).