Does Getting a Credit Card Sound Absolutely Frightening?

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woman on computer holding a credit cardI have asked many of my friends what credit card they carry? I am shocked to learn the most common answer is they only use a debit card. Some had a terrible credit card experience in the past and now have a fear of them. They screwed up their finances and feel more in control using a debit card now.

If you had a terrible credit card experience that left you with a painful memory, you’re not alone. Many of us needed to live beyond our means when we were younger, and a credit card was the best solution at that time. It got us through that period of our lives – but at a cost.

Over the last 30 years, I realized life has many obstacles that one needs to overcome. With every mistake made, there usually was a painful learning experience. These experiences help us avoid repeating history.

After experiencing debt, most people have found the best solution is to use a debit card. There is comfort in knowing you are in control and don’t have to face the perils of interest accruing on interest. Now that you are well versed in managing your credit, it’s time to get back on the horse that threw you off. In other words, get a credit card that gets you something back with every controlled dollar you spend.

Your debit card may give you a sense of security but you miss the opportunities for free travel and thousands of dollars of cash back.

How can the bank that screwed you years ago with mountains of interest offer you something back? Sounds sketchy and untruthful. During my early twenties, banks started creating loyalty programs and were learning how much they could give away and still stay in business. Rich offers of free travel were literally there for the taking and still are today.

Here are major life changes that caused us to carry too much debt.

1. Entry-level job and living beyond your means

young men and women at happy hourAs young adults, many of us did not have anyone telling us how to handle credit. You land your first job and you are optimistic and carefree. You believe your salary will cover your expenses and then some. This is an exciting time in your life so you get and use your first credit card. You go out to dinner, get the clothes you need for work and meet friends for drinks. Soon you find that you have spent more than you have earned and the credit card’s interest has left you in a pile of debt.

Your solution most likely was to pay the interest over the years and you learned from it with less-than-positive thoughts. That was many years ago and now you make more money and can honestly make a lifestyle change by carrying a credit card. The banks that took hundreds, if not thousands, of dollars in interest owe you something back now that you have good credit. Thinking that a debit card keeps you safe is a thing of the past. You can manage your finances. Your mindset should be to get the free travel that you deserve.

2. Putting a career on hold to raise children, even when your household needed 2 incomes

So many couples talked that having a stay-at-home parent would be worth the debt. The talk went something like this: “We wouldn’t miss those moments and wouldn’t trade them for any thing in the world. We will get by, using the credit cards if we have to.” As the kids got older, the time came to get back to work and pay off that mountain of debt.

Nothing could be scarier than the debt you built up during that time with a credit card. You find comfort in knowing a debit card will stop you from new debt and it’s taught you to spend only what you have.

Since your spending is under control, why not get something more that will benefit your family? Carry a credit card but use it like a debit card and you could be earning free travel or cash back without causing you to spend anything more.

child running to mother on beach

3. A terrible divorce leaving you in debt

man and woman signing divorce papers

Most of us have friends who have gone through terrible divorces. There are ones where a spouse, just prior to leaving, maxed out the credit cards. Then they ask for a divorce. Fortunately, the people I know overcame this horrible situation and decided to do whatever necessary to prevent that from happening again.

In digging out of the situation, they rely on a debit card. This ensured they spent only what they had, and has become a safe payment choice. Eventually, they are back on their feet and dating. The same should be true for a credit card. Maybe the first experience was horrible but now that they’re older, they should be wiser and carry a credit card that gets them something in return, whether it is cash back, free travel, free hotels or other wonderful benefits.

4. You lose your job

Been there, done that. I have been laid off three times, which led me to opening my own business. A big corporation spares no one when it comes to improving the bottom line. They see you as just a number and, if you are the wrong salary, you will find yourself in the unemployment line.

You get to a point in your life that you can’t move back with your parents. Finding a new job is challenging, and the time it takes is unpredictable. In today’s economy, few of us can say we have a savings account. You constantly use your credit cards and before you know it the cards are maxed at limits that were established while you were working.

If you took out a balance transfer offer with a card right before this happened and did not get the timing right in paying it off, all of the deferred interest comes due. You were drowning in debt. Finally that job came, and hopefully, it was for more money and a higher level. Eventually you get through the debt. It usually pays off to go through a job loss but I can tell you it is painful.

So which credit card is the best for the financially mature who are timidly coming back to credit cards?

woman on computer holding credit cardGetting back to using a credit card will most likely take a lot of self-confidence. You can see the small print on the credit card offers and understand there are legal ramifications. Take a step back, look at the large print and see which rewards card you want to use with confidence. Why is the bank willing to give you free travel or cash back? They have learned their lesson as well and only take those who have exceptional credit. If you are willing to be responsible, the banks don’t take on the same risk and both parties are getting something back from the relationship.

Until you become credit card savvy you need to have the most basic of choices offered to you. I like the following cards for their simplicity:

BarclayCardArrivalPlus

1.Barclaycard Arrival Plus® World Elite Mastercard®

 

The Barclaycard Arrival Plus® World Elite Mastercard® earns double miles on every purchase. That’s a great way to kick-start your rewards card experience. And it currently offers a 40,000 mile sign-up bonus – which is enough for a $400 statement credit. To me, this is a fantastic welcome back to credit cards. And for extra value, you get 5% of your miles back to use for your next redemption.

Here’s what we like about the card:

  • Enjoy 40,000 bonus miles after you spend $3,000 on purchases in the first 90 days – that’s enough to redeem for a $400 travel statement credit toward an eligible travel purchase.
  • Earn 2X miles on all purchases
  • Get 5% miles back to use toward your next redemption, every time you redeem
  • Miles don’t expire as long as your account is open, active and in good standing
  • No foreign transaction fees on purchases made while traveling abroad
  • 0% introductory APR for 12 months on Balance Transfers made within 45 days of account opening. After that, a variable APR will apply, 16.99%, 20.99% or 23.99%, based on your creditworthiness. There is a fee for balance transfers.

2. Citi® Double Cash Card

If you’re just getting back into credit cards and are testing the waters with earning rewards, Citi® Double Cash offers a very simply way to earn double rewards on your everyday purchases. When you use your card for purchases, you earn 1% cash back. Then, when you pay off your balance, you earn another 1% cash back. Carrying this card can help you ease back into using credit cards, while earning cash back fast.

Here’s what we like about the card:

  • Earn cash back twice on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
  • Balance Transfers do not earn cash back
  • 0% Intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.24% – 23.24% based on your creditworthiness
  • Click ‘Apply’ to see the applicable balance transfer fee and how making a balance transfer impacts interest on purchases.
  • No categories to track, no caps on cash back, no annual fee*

3. Barclaycard CashForwardTM World Mastercard® cashforward-wbutton

Barclaycard CashForward™ World Mastercard® is one of my favorite cards. I highly recommend it for credit card users of all types because it earns unlimited 1.5% cash rewards on ALL purchases. And for “born-again” credit card users, the current sign-up bonus only requires spending $1,000 in your first 90 days to receive $200 cash back. Many cards require you to spend upwards of $3,000 in your first 3 months to receive your cash back bonus, which can be a bit steep for those weary of spending too much on their cards.

Here’s what we like about the card:

  • Get a $200 cash rewards bonus after you spend $1,000 in purchases in the first 90 days after account opening
  • Earn unlimited 1.5% cash rewards on every purchase
  • Every time you redeem, get a 5% cash rewards redemption bonus to use toward your next redemption
  • Redeem your cash rewards for a deposit into a U.S. checking or savings account, a statement credit or gift cards. Redemptions start at $50
  • Cash rewards do not expire as long as your account is open, active and in good standing
  • Enjoy a 0% introductory APR for the first 15 months on purchases. Plus, you’ll get a 0% introductory APR for 15 months on balance transfers for each balance transfer made within 45 days of account opening. After that a variable APR will apply, 15.99%, 20.99% or 25.99%, based on your creditworthiness. Please note, there is a fee for balance transfers.
  • No annual fee

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One Comment

  • Randi Schwartz says:

    Terrific article Barbara! I love all the clear credit card information. You cut through all the red tape!

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Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.