Most of us have grown up learning that debt is not good, especially credit cards.

Credit cards are one of the best cash flow instruments:

When does it make sense to use a credit card? When you pay off the balance in FULL every single month.

You cannot carry a balance long term and think you will get ahead financially when you could be paying upwards of 15% or higher on this debt!

The best method of utilizing credit cards is as a cash flow mechanism. Whatever items you pay for on the credit card during the month, you will be paying this off in FULL every month. What does this mean? You are not buying items outside of your allocated budget, but rather using this as a cash flow tool.

Why does it make sense to use a credit card instead of cash?

One aspect is the credit and fraud protection you obtain with credit cards that you most of the time would not obtain with debit cards. Additionally, you can obtain points, miles or cash back on purchases you’re already making every month.

Why should you use credit cards as a cash flow tool?

Depending on the credit card, you can obtain serious cash back or points on these credit cards. Some people call this credit card hacking, but I view this as another financial tool. If you already are planning to spend money during the month within your budget on groceries or gasoline for your vehicle, why would you not want some free money?

Say you spent $1,000 per month in cash, you would pay this amount and obtain the items in return. Rather, if you utilized a credit card that has a 1% cash back, you would be obtaining $10 per month in cash back. Over a year of expenses, you would obtain $120 dollar in free cash – I mean, who doesn’t like free!

There are credit cards that give travel rewards through hotels or major airline companies too.

Personally, I have three credit cards and I utilize them all in different ways:

Cash Back – I have this through a credit union that gives me 1.5% cash back with no annual fees.

Bank of America Cash Back – The Bank of America Cash Back card gives me 1% cash back, but you can choose categories like gas or online shopping, where you can obtain a bonus cash back up to 3% (on the first $2,500). Since there is a maximum rewards back at the 3%, I use this card up to this maximum. Preferred Rewards members earn 25%-75% more cash back on every purchase based on your various tiers. When you enroll in the Preferred Rewards program, you can get a 25% — 75% rewards bonus on all eligible Bank of America credit cards.

Plus, as a Preferred Rewards member, you enjoy real benefits and rewards on your everyday Bank of America banking and Merrill investment accounts. As your qualifying balances grow, so do your benefits.

Chase Sapphire – I have been using this as my primary credit card. When I joined, I obtained 100,000 preferred bonus when I spent $4,000 in the first three months. For someone that spends a lot and properly uses the credit card, this is one of my favorite credit cards. Its aesthetics are amazing – not some flimsy plastic but nice and heavy! There is a $95 annual fee with this card, but with all the rewards, it’s well worth it! Chase Sapphire, usually doesn’t offer this many points, so take advantage of this limited time off! You can use these reward points for airfare, hotels, and other shopping!

If you pay off the balance in FULL every single month, credit cards are one of the best cash flow instruments. You’re already going to be spending money every month! You might as well get cash back or rewards that you can use for vacations or shopping! If you’re looking to learn more about credit cards, check out the book, How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line or Freedom in Credit Cards: How to Take Charge of Your Life, Your Credit, and Your Future – both are great reads! Your financial future is up to you and only you. What are you going to do about yours?

Until next time,


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