Want to know the best way to use credit
cards in order to achieve FIRE, financial independence retire early, and basically
become financially free so that you are not so stressed about money?
Well, that's what I'm sharing with you.
In today's video, we are discussing how
to best utilize credit cards so that they can actually help you achieve financial
freedom instead of put you in a lot of debt.
I'm also sharing my personal favorite credit card right now.
And the pros and cons of that, I am Tiffany Thomas with Wealthy
Tiffany Dotcom, and I achieved financial freedom at age thirty eight.
So if you are looking to achieve financial freedom at a young age as well,
hit that like button and hit the subscribe button and we are going to dive right in.
I know there's a lot of talk about how bad
credit cards are and how much debt people get into because of credit cards
and that you should stay away from them completely.
But that is not always the case.
If you use them properly,
they can actually help you achieve financial freedom sooner.
That is what happened for me.
I've been using my credit cards
for a really long time now and have never paid credit card interest and was still
able to become financially free at a young age.
And before I go any further,
the secret to using credit cards is having self control.
There needs to be some self control or
some self discipline when using credit cards so that you don't max out your
credit cards and have a ton of debt and pay a ton of credit card interest.
So if you do have some self control,
then let's talk about the benefits of using credit cards.
And in talking about the benefits
of credit cards, we have to first understand how credit cards work.
So we are just going to talk about this very briefly.
Essentially, you apply for a credit card,
get approved, they send one in the mail, and then you're able to use that card
at different stores that allow credit card purchases.
And with that credit card,
they also give you a limit that you can put on your credit card.
So it could be maybe five hundred dollars, up to ten thousand dollars.
It varies greatly, but they'll give you some sort of limit.
And you're not supposed to go over that credit card limit.
You will also be assigned a statement closing date each month.
And this will be the same day each month.
But they allow you to make purchases,
let's say, from the 16th of the month until the 15th of the next month or so.
Your statement closing date would be
the 15th of February if it was going into February.
Once that statement closing date has happened, then they will send you a bill
and say, OK, your balance, your statement balance from those
particular days, the 16th to the 15th is this amount.
And then they will give you a minimum
payment amount and then they give you a due date that you need to either pay
that balance in full or at least pay your minimum payment due.
And if you pay the statement balance in full by the due date they give you,
then you do not pay any interest on your credit card.
But if you're only making that minimum payment, then you'll pay whatever
the credit card interest rate is for the remaining balance.
And if you continue to just make
that minimum payment each month, that balance will continue to grow
and grow over time and you will be paying interest on that full balance.
So not just on the prior month's purchases, but it will continue to add up.
So whatever you put on that credit card, you will be paying interest
for that amount if you pay after the statement due date.
And that's why people end up paying a lot in credit card interest because they
continue to spend on their credit card, but only make that minimum payment.
So they are continuing to pay interest
on previous purchases, which could be a year ago or two years or however long.
So it's really important that we pay off that statement balance in full each month.
All right.
Now that we know how a credit card works, let's talk about how to use that credit
card to achieve financial freedom even faster.
First off, when you are getting a credit
card, I like to look for one that has a sign up bonus and they'll usually have
some type of requirement to get that bonus.
So, for example, they may have you spend a thousand dollars within the first three
months of opening your credit card and then you could get a one hundred
and fifty dollar bonus or something like that.
But if you look for one that has that sign
up bonus, then you can put that money toward your Financial Freedom Fund.
And going along with bonuses, some of them actually have a referral bonus.
So if you really like one of your credit cards, which I like one of mine,
which I'll be sharing with you later, they will offer a referral bonus if you
have someone else that you can refer that credit card to,
and then they end up signing up and getting approved for the credit card,
then you'll receive some sort of reward for that.
And this next part that I want to talk to you about is the most important part.
And this is using your credit card for every single purchase that you can.
I remember going to dinner with a group of friends a while ago, quite a while ago.
Years ago. And one of my friends had used
his credit card, and he had seen me use my debit card and he had mentioned that he
uses his credit card for all of his purchases because, why not?
It offers a cashback bonus.
So he put every single purchase he
possibly could on his credit card to receive that cash back.
And that's the next part of using credit cards to get to financial freedom quicker
is by choosing a credit card that has cashback or reward points or even Miles,
if you like to travel a lot just depends on your preference.
But you find one that has a really good cashback system that works well for you.
And that way you are getting paid something to use your credit card.
And of course, you don't want to be spending more than you normally would just
because you have a credit card and you're not using cash to pay for everything.
But if you are already spending
that money, then why not put it on a credit card so
you can earn as many cashback rewards as possible?
And ever since going to dinner
with that friend, I have been putting everything possible on my credit card.
And by doing that I have earned hundreds
and hundreds of dollars each year in cash back rewards, which means since I'm
earning that extra money just by using a credit card instead of a debit card,
I can put that money toward my Financial Freedom Fund.
And with that cash back, most credit cards offer a statement reduction.
So you can actually just pay down your
statement balance with those reward points or that cash back.
The next item I want to bring up about
credit cards is that they have really good protection against fraud.
And I've had this happen to me on my credit card.
There was an unauthorized transaction somehow on my credit card and the credit
card company had actually called me and said we noticed this charge.
I think it was in Florida and I live
in Utah and they noticed this charge on my credit card.
And so they had called and said, oh, was this you or was it not?
And I just had to press one or two and say, yes, it was or no, it wasn't.
And then they took care of everything.
I said it wasn't me.
And they immediately removed that charge and set me on a new card.
So it was a very seamless process.
And when you use a debit card and there's
fraud on your debit card, they can actually freeze your entire
account so you can't access your money, which is really scary to me.
So that's just another reason I like using credit cards.
There's extra protection there and you don't have your accounts frozen.
And since it is so seamless to take care of, you're not wasting any time calling
your bank, asking what happened and asking them to unfreeze your account and then
telling you, oh, call us back in a few days.
We don't know if this has been authorized or whatever.
It's a lot simpler and a lot quicker.
So you can actually spend your time on something more meaningful,
maybe researching your next investment to put you closer to financial freedom.
And like I mentioned earlier,
if you do like to travel, I personally love to travel,
then I would look for a credit card that does not have a foreign transaction
fee, usually with a debit card or even some credit cards.
They charge a foreign transaction fee.
So if you're traveling and you need to use your card in another country,
then they charge you an extra fee in order to do that.
So I would look for a credit card that does not charge a foreign transaction
fee if you are traveling out of the country a lot.
And that way you are saving money,
essentially what you can put toward your Financial Freedom Fund.
And most credit cards will offer an insurance policy on drivers.
So if you're getting a rental car somewhere, usually they will ask, oh,
do you want to add insurance to your rental policy?
And you can say no if you've used your
credit card to purchase that rental car because that insurance is actually on your
credit card, you don't need to pay that extra insurance costs.
So, again, you're saving money and you can
put that toward your Financial Freedom Fund.
And I would look for a credit card that does not charge an annual fee.
You don't want to be paying extra for a credit card.
And yes, sometimes it may be worth it
to you to have a credit card with an annual fee,
depending on what it includes and what you would spend your money on.
So if you are flying a lot and you get free access to the VIP lounge and you
would normally pay for that, then maybe it would be worth it.
But I would say for most people, look for a credit card that does not have
an annual fee because there are a ton out there.
And this way,
instead of paying that annual fee, you could put that money toward, guess
where, your Financial Freedom Fund.
And the last thing that I want to bring up about credit cards is that when you are
using a credit card correctly, you can really build up your credit score,
which in turn means that you can purchase very large purchases like a home or even
a car with a lower interest rate, because the higher your credit score,
then the lower interest rate you are going to get on those larger purchases,
which is really important, especially if you are taking out a
loan on a 30 year mortgage, you want to have the lowest rate possible
because if you're going to pay that off over 30 years, you don't want to pay
a higher interest rate over that amount of time because that will be a huge amount.
Even with a really low interest rate,
you are still paying a ton amount of interest.
And I do actually have another video about how to increase your credit score.
So I will leave a link above and below
in the description and you can check that video out after this video is over.
But just a couple of things about building up your credit score with a credit card.
You don't want to open too many credit cards at once because the creditors will
look at that and think, oh, they might be doing something risky if
they are applying for a lot of credit cards at once.
You also don't want to max out your credit card.
You don't want to spend the maximum limit
that you can because that's going to lower your credit score.
The recommended amount is 30 percent.
So if you have a ten thousand dollar limit on your credit card,
then that you could spend up to three thousand dollars and still be OK.
But the lower the balance on the credit
card, the higher the credit score can increase.
And you never want to carry a balance.
You never want to pay credit card interest.
And some people have actually said, oh,
in order to build your credit score, you have to pay credit card interest.
That is not true.
I've never paid credit card interest and I have a really high credit score.
So not true.
You never have to pay credit card interest.
So do not carry a balance on your credit cards.
The only time I have done that is when I
have a zero percent interest rate on my credit card.
And that's another thing to look for on credit cards.
When you are searching for one,
look for one that does have a zero percent interest rate, especially if you are going
to make a large purchase, then you will have more time to pay that off.
But I would honestly say do not make a purchase that you cannot pay off in full.
When I personally had signed up for a new credit card that had a zero percent
interest rate for I think it was 12 months or 15 months, I can't remember exactly.
I had finished my basement and put part
of that payment on my credit card and paid it off over the next few months,
which was totally fine because it was a zero percent interest rate and it was
completely paid off before the regular interest rate took effect.
So I did not pay any interest on my credit card.
And just one more little tip for you about using credit cards.
If you are looking to increase your credit score, if you know you're going to be
buying a house soon and you want the highest credit score possible,
then pay off your credit card in full before the statement closing date.
Because when the statement closing date
happens, that's when they report it to the credit card bureaus.
So if you've paid off that balance
in full, that means your credit score will be a little bit higher.
So that's just one quick little tip for you.
And now I want to talk about my personal favorite credit card right now,
and that is the Capital One, Quicksilver credit card.
And I just want to go through a few of the benefits of this credit card
and then actually only one con of this credit card.
So if you are looking for a great credit
card to get, I will leave a referral link below in the description and you can click
on that to sign up for the Capital One Quicksilver credit card.
I do have other credit cards that I still
use, which I did a video about all those different credit cards earlier.
So I will leave a link above and below
the description and you can check out that video later.
First off, the Capital One Quicksilver Card offers one point five
percent cash back on all of your purchases.
And a lot of credit cards offer just one percent cash back on everyday purchases.
And then they'll have rotating categories,
which they'll offer a higher percentage cashback.
But I like just having the one point five
percent cash back on everything and there's absolutely no limit.
So you can spend as much as you want
to on your credit card and still always get that cash back rewards.
And they do offer different ways to receive that cash back reward.
And we talked about this a little bit
earlier, but you can just have a credit on your statement so it pays down
the balance on your credit card, or you can even get a check mailed to you
or you have access to different gift cards you could purchase.
You could even have it automated and just get that cash back when it reaches
a certain dollar amount or even just a certain time every year.
Also, they offer that sign up bonus.
And if you do want to sign up and use
my referral link, then you get a $200 cashback bonus.
When you spend five hundred dollars within three months, which I feel like is very
reasonable, five hundred dollars in three months.
And they do offer that zero percent
interest rate for 15 months, which is amazing.
If you are planning to make a very large purchase after that,
the interest rate will increase from zero percent to fifteen point four nine percent
all the way up to twenty five point four nine percent, depending on your credit
history. They also let you transfer balances
and there's no transfer fee, which is amazing.
So if you did have a balance on another credit card, you could transfer that over
to Capital One and use that zero percent introductory interest rate and pay
that off before that 15 months is up so that you aren't paying interest
on whatever amount you have on your credit cards.
And going along with that,
I don't recommend trying to find a new credit card all of the time with a zero
percent interest rate and just continuing to carry a balance.
We really need to pay off our debts so
that we don't have to worry about things like that.
But we can actually use them to our advantage.
Also, Capital One Quicksilver does not charge an annual fee.
Another little secret.
A lot of people don't know this.
You can add someone else to your credit card.
You can authorize them to use your credit
card and that will increase their credit score.
So if you have a spouse that doesn't have the best credit, you can add them to your
credit card and help increase their credit score.
Or maybe you have a child that doesn't have that much credit history.
You could add them to your credit card
and help boost their credit score just if you wanted to.
It's also a Visa credit card, which is accepted pretty much everywhere.
They do not charge a foreign transaction fee.
They also have a complimentary concierge service.
So if you want a little extra service, they do have that option.
They have an extended warranty.
So some purchases that you make, maybe if you're buying a fridge or
something like that, then you would want an extended warranty.
They offer that free of charge on eligible purchases.
They have a twenty four hour travel assistance.
So if your credit card does get lost or
stolen, they can send you an immediate replacement.
They do offer travel accident insurance,
if, heaven forbid, something were to happen while you were on vacation.
And if you want instant notifications, they can send you a notification every
time purchases made so you can stay on top of every purchase that's being made.
If you did give access to your spouse or
a child, you would know immediately when they made a purchase or if there was
fraudulent activity, then you would know immediately if that were to happen.
They also have a cool shopping tool that you can just turn on and it will look
for coupon codes for anything that you're purchasing online.
You can also use those rewards that we
talked about earlier to make a purchase on Amazon.
So if you have cash back rewards that you've stored up in your account,
then you can say, oh, just apply that to my Amazon purchase.
So that makes it really convenient.
And if you like to use PayPal when making a purchase online,
then you can also attach your credit card to PayPal to make the purchase.
The only con that I have about this credit card, and it's not even that big
of a deal, but if you do have a cashback reward that you want to use to credit your
statement to lower your balance on your credit card, it does not go toward your
minimum payment that's due, which isn't a big deal for me because I
pay off my credit card in full each month anyway.
But just be aware if you wanted to use one of those cashback rewards,
that it will not go toward your minimum payment that's due.
So all in all, so many benefits and one
small con, if you're even worried about that.
But we shouldn't be because we're paying
off our balance in full anyway each month.
And if you like all of these benefits
of the Capital One Quicksilver card, I will leave my referral link below
in the description and you can click on that to get your two hundred dollars
sign up bonus if you spend five hundred dollars within the first three months
and hopefully you found this video helpful and you got some ideas on what you should
be looking for when you are looking for a new credit card and the different
ways you can use a credit card to reach financial freedom even sooner.
And if you did find this video helpful,
please hit that like button and share it with someone else who would like to hear
this information and hit the subscribe button to subscribe to my YouTube channel
and hit the little bell to get notified when I post new videos.
Thanks so much for watching.
I'll see you in the next video.