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How to Make Credit Cards Work For You

Credit cards are awesome. I have a queue of credit card applications like an online-shopper has a wish list. But it wasn’t always that way. In fact I, like many others, believed that the path to good financial health lies in using as little credit as possible for fear of falling into debt. That was, until I met a new friend – Chester.

What stands out about Chester is that he uses more than nine different credit cards, and his credit score is higher than 800. This immediately disproved my belief that it was bad to open too many credit card accounts. After a long conversation with him, I was sold on his reasons why credit cards are good – if you use them wisely. Below are the top three reasons:


Users of traditional debit cards are less incentivized to use them because they don’t offer any rewards. Many credit cards do. Rewards are typically redeemed in two ways: cash or points (merchandise and travel). The cash-back cards allow users to redeem cash through a statement credit or as a check whenever a certain threshold is reached. Cards used to redeem points are normally spent on plane tickets, hotels, gift cards, or a variety of merchandise, including electronics and jewelry. Both types of reward programs are usually equal in value. It just depends on the consumers’ preference. However, some cards are better than others. Consumers should choose the card that offers the highest points per dollar or highest percentage cash back – with the smallest annual fee.

Brian Kelly, a blogger and leading influencer in the credit card industry, has more than 25 active credit card accounts. It’s no wonder he’s known as The Points Guy. He utilizes all his cards, generating enough points to travel around the world for free. Since the launch of his website that teaches how to take advantage of credit cards, it has become more and more common to hear stories of how people have traveled abroad for free. Read some of those success stories here.

The Hidden Benefits

Visa, MasterCard, American Express, and Discover offer valuable benefits that many people don’t know about. These companies offer valuable perks that can help credit card users save hundreds of dollars each year. Perks often includes car rental insurance, extended warranty coverage, price protection, and roadside assistance. Keep in mind that Visa, Mastercard, American Express, and Discover generally offer the same kind of benefits with some minor differences. Before taking advantage of these benefits, it’s best to read the full details of what each company offer. You can read those details here.

Builds Credit Score

Contrary to popular belief, having multiple credit cards can be better for your credit score than having only one or two cards. When initially applying for a credit card, your credit score will drop but only temporarily – usually for about three months.

What’s more important is to focus on how you can improve your credit score. Your score is determined by five factors: payment history, amount owed, length of credit history, credit mix, and new credit. Sixty-five percent of your credit score is determined by the payment history and credit utilization (amounts owed). If the credit card holder is responsible in paying all cards on time and not spending more than 30 percent of the total credit limit, the credit score will be in good shape, regardless of applying for a new card. In fact, it may even increase your credit score in the future because opening a credit card lowers your credit utilization ratio and increases your credit mix – the types of credit that makes up the report.

Four years after meeting Chester, I rarely carry my debit card. Instead, I use nine different credit cards that have helped me amass enough points to save me hundreds of dollars on flights. This year I’ve booked flights to San Francisco, Portland, and Cancun for free using my rewards.

So, if you find the best rewards programs, pay your balance on time, and use your credit cards wisely, you too can enjoy a long list of perks and get the benefit of cash back, free travel and merchandise – all while continuing to build good credit.

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