Smart Military Money
Personal finance tips andadvice for the military lifestyle.
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Military members are more likely to have a credit card than civilians.
They’re also less likely to pay their balance in full.
Those findings come from a 2010 survey conducted by the FINRA Investor Education Foundation. They also suggest that some military members may be struggling to stay afloat financially.
Credit cards come in handy for several types of purchases, but not for everything.
Carrying credit card balances can harm your credit score and make it difficult to secure car loans, home mortgages and other financial tools. And that means it’s important for U.S. service members and veterans to consider what charges, if any, they should put on a credit card.
Here are some major Do’s and Don’ts when it comes to using credit responsibly:
Delivery insurance and protections against damaged or lost products are major benefits of buying with a credit card. Some credit card companies offer rewards for tickets, but find out which events are part of the rewards program. The same goes for gas purchases, which might earn 3 to 5 percent cash back.
Spend wisely and only when you know you’ll be able to pay off the balance without accruing interest or late fees. Know what to buy and what not to buy while keeping your cards’ balances at or below 30 percent of their credit limit.
Photo thanks to Images_of_Money under a creative commons license from Flickr.
One Comment
People have this misconception that you should stay away from credit cards completely, but if you have self-control, credit cards are a great way to get a little money back. If I can use credit, I use credit; I very rarely use cash. The key is to not carry a balance (pay off your card completely after every month).
If you get a credit card with no annual fee and some sort of reward program, and then don’t carry a balance, not only will you build credit, you’ll also get some money back! There are all sorts of different reward programs for different categories of things. I have a Citi Forward card that will translate to 5% back on restaurants/dining and books (and actually any Amazon purchase) (point system, so 5 points per dollar, rather than 5% back completely; I’m using it towards student loans, so it will translate to 5% back for me). I intend on getting an AMEX Blue Cash card to get 3% back on groceries some time (2% on gas). If I drove, I would get some 3% or 5% cash back on gas.
http://www.moneycrashers.com/best-cash-back-credit-cards/ Just look around for what are the best credit cards for your situation. Look for one with no annual fees, and make sure you don’t carry a balance, so that you never have to pay a thing.
And if it’s a point system, realize that 5 points per dollar back doesn’t always translate to 5% back (or whatever the system is). It depends on the reward you request. I am going to apply my points towards my student loans to get a full 5% back on my Citi Forward card, but otherwise, I might actually be only getting 3% back if I bought restaurant gift cards or other items. And in the future, maybe the credit card company will increase the point cost of the restaurant gift card so that I’ll actually only get 1% back through restaurant gift cards. In other words, cash back is preferred, and point systems will require a little strategy to optimize your cash back.