Most people think of credit cards as a piece of plastic instead of real and actual money. There’s a psychological element to that way of thinking. When you don’t see the cash leaving your hands, it’s like some other entity is controlling your finances.

On the other hand, we use this new technology for pretty much everything. You can buy plane tickets, fill the grocery bags at the local supermarket, put some gas in your car, and even make online transactions. How would we manage to do all that if they didn’t exist?

That’s why each one of us carries at least one card in our wallets. It’s the simplest and fastest method of payment that the banks have thought of. However, there are always some drawbacks to every positive. There’s a bit more to the picture than just being quick and simple when it comes to processing payments.

Here’s an interesting fact. You can benefit from using your credit cards correctly. That might seem paradoxical and counterintuitive at first. These devices are meant for spending money. How in the world can you possibly benefit from that? Well, there are a number of tips that might help you get more cashback and points that can be used for traveling around the world.

The power that lies in credit cards

At the moment, there are more than a billion cards in circulation in the United States alone. When you divide that number with the current population, it comes out to five cards per person. There’s a pretty good chance you have more than one.

When you take a look at it carefully, you will notice a couple of different sections. There are a bunch of numbers on the front and expiry date, as well as your name and surname. You can visit and read more. In some cases, your address may be printed too.

On the backside, there is a magnetic strip and three numbers. There are two ways you can think about this piece of plastic. One, it might represent a tool for managing your finances. Two, it might represent a burden. It’s highly probable that you fall in the latter. But it’s not a long way from getting some perks, even if you have a few at the start.

For now, you need to have in mind that in the beginning, the bank is the entity that will receive all of the advantages in the form of interest. Since the bank is the place that keeps your money, they can handle the risk of giving you a bit more if you’re going to repay a little extra in the future.

For a lot of people, this doesn’t seem fair. However, that’s the basis of a capitalist society, and it’s how things work. There’s no point in arguing about that fact. The best thing you can do is to figure out a way to get more stuff for the same amount of money, and that’s possible.

This will come in the form of getting miles for dollars, gift certificates, vouchers, and cash rebates. Here’s another interesting fact. Banks want to compete with one another. They’re individual businesses. This means that they’re going to think of creative ways to get more clients.

Thousands of offers are constantly aimed at you, and lenders are desperate to make you an account that they will go to any length to get it. In 2006, more than 10 billion dollars were given back to customers with rewards programs. In 2010, that number exceeded 18 billion. Today, you can get all of the perks without going into debt.

The basics

Before you buy anything online, you need to know what’s going on through the computers that are making the transactions. Each lender has a pile of cash in a safe. Your account has that money sitting in a safe place.

Whenever you make a payment, the bank sends the correct amount towards the right destination. You can think of that as borrowing from the lender and giving to the merchant. Now, in the case of credit, you can go over your limit.

This means that you can spend more money than you currently have. Based on the agreement that you signed, you’re going to repay the initial amount with a little bit of interest. This makes life easy since you don’t have to carry cash on you. That’s quite convenient for large purchases.

What’s a better option?

Ever since debit and credit were introduced, there has been a debate over which is better. There’s no correct answer to that question. It depends on the individual. What level of caution do you take when making payments? Can you avoid the lucrative invite of impulse buying?

Do you go online shopping when you’re drunk? Do you have clear boundaries with your finances? Finally, the most important question of all is whether you can handle amassing a mountain of debt? If you’re not the most responsible person, then it makes sense to stick to a debit option.

It’s the same piece of plastic, with a few other properties that make them useful. In this case, you have instant access to your funds, and you don’t need to make checks. The major drawback here is that fraud can’t be detected easily. This means that if you lose your wallet, you must report it immediately.

A thief can use it and compromise your account and empty it out completely. The choice is easy to make if you live in a neighborhood where the crime rates are high. Credit cards have tons of restrictions that limit the amount of money that can be spent on them.

The most you can pay out of your own pocket is fifty bucks. That’s nothing compared to the loss of your entire account. In the past two years, the policies have changed, and you might not even have to spend a dime if something goes wrong.

What should you do?

To determine the ideal option, you need to follow some guidelines. First of all, you need to be familiar with the restrictions and the terms of use. Secondly, you need to be familiar with the features you get and how they can be used in your favor. In life, it’s not all about what happens to you.

It’s all about how you react to it. That’s completely the same with choosing a financial vehicle. Instead of being reactive, try to be more proactive. The first objective is to find a solution that has a low-interest rate. Put yourself in the shoes of the institution. They want to profit from you by charging you for late fees, annual fees, and high interest.

Even if you think the offers are completely legitimate, there are better options. Oftentimes, you’re going to get an offer in your mailbox. It might seem great at first, but you need to take into consideration that your address was picked for a marketing offer.

Marketing to a wide audience costs a lot of money, which means there’s a hidden agenda in the mix. Unless you have a fantastic credit score, going for an offer from the mail is not worth it at all. Lots of these marketing campaigns use the same language and phrases.

It always pays off to be well-informed. There are plenty of newspapers, newsletters, magazines about personal finance, and websites that will be of help. If you’re not sure about what you want, you can dial the number of a financial institution and ask around.

They won’t charge you for it. Another great option is to schedule an appointment with a financial advisor. They can take a look at your credit score and determine the things you’re doing right and wrong. We always want to overestimate ourselves, and we often fail to take a look at the realistic picture.

You might have some bills that you haven’t paid on time that are decreasing your score, and you’re not even aware of it. Also, when you get in touch with the administration of a lender, you might get a one-of-a-kind deal that can’t be found anywhere else.

You’re going to use that card for a couple of years. It pays off to spend a couple of hours comparing choices instead of going for the easiest route. The internet is a great plate to get the latest information and dialing the phone will only take a few minutes.