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Monday, January 23, 2023

Beginner's Guide to Credit Cards

Drawbacks of Credit Cards

First of all, credit cards are //dangerous!// If you use them without paying off every cent when the statement comes due, you'll start paying interest and lose any benefit you might have gained. In the worst case, you'll wake up in life-crippling debt before you realize what's happening. The possible benefits to be gained from using credit cards are relatively small. Nobody gets rich on credit card rewards. The banks know that making a mistake can be costly, and the average person makes mistakes. They're counting on it. No matter what, start slow. = Benefits of Credit Cards The main reason to get a credit card is for cashback. Merchants have to pay a small percentage of every sale they make to the credit cards (1-3% typically). Most merchants do not offer different prices for consumers paying with cash/debit and those paying with credit. So this fee often ends up in the price of things you buy. That's why banks can afford to pay you cashback for using their credit card, and it's why you should probably do it. There are also some secondary benefits that vary from card to card: * Cashflow delay. * Disputes. * Purchase protection. * Insurance for rental cars. = Recommended Cards for Beginners = Churning & Manufactured Spending