4. Credit cards can also be your friend
A lot of credit cards (in the US) come with rewards programmes such as travel rewards (miles or statement credits) or cashback.* Usually, you can earn points, miles or cashback on your daily spending with bonus points being earned for particular types of purchases or using your card with a specific company. Others, usually store-branded cards, offer discounts whenever you use the card at that store. If you often frequent a specific store or you use a particular airline or hotel brand more than others, it might be worth getting the credit card for that company.
My credit card philosophy is if I’m going to be spending money anyway, I might as well be earning rewards for it. We all need to go grocery shopping right? I do not believe in credit cards that do not offer rewards, and yes, I did say “believe in” because as far as I’m concerned, they do not exist.
Personally, I use these rewards to save for travel or pay for parts of my trip. For example, in the past, I’ve paid for a round-trip ticket home to Jamaica from New York using my travel rewards points. You might do the same or you can use them to save, in the case of getting discounts instead, so that you can put the savings towards a trip. Different methods, same results. One of my goals is to completely pay for a trip using only credit card rewards or airline/hotel loyalty points.
I’m not a financial adviser and I don’t want anybody coming back and saying “Well Juleen said I should get a credit card to earn points”. You know yourself, your financial situation and your level of self-control. Use credit cards wisely. I said they CAN be your friend if you don’t let them be your enemy. Avoid credit card debt at all costs.
a. Ensure you have at least one credit card with no foreign transactions fees. Paying 3% of your purchases hurts my soul. I prefer to use credit cards when I travel because it’s safer and they usually have better exchange rates than a cambio.
b. Also, ensure to always add cashback offers to your credit cards and use that card for your purchase/reservations to earn back some of the money you are spending anyway. For example, one of my banks is currently offering 5% cashback for Airbnb reservation. All I have to do is activate the offer on my card and remember to use that card if I make an Airbnb reservation before the offer expires.
c. *To my Jamaican readers, cashback and travel rewards credit cards have landed in Jamaica so now you can put your cashback savings towards your travel fund.