So in this we learn what is a credit card actually supposed to be used for well I’m going to tell you the four things that credit cards are actually for in today’s training.
We’re discuss about how do you properly use a credit card and really what are the four things that your credit card should actually be used for and I’m looking to build their credit or establishing credit and and there’s the fear that most people have in establishing and utilizing you mean touching credit cards is the fact that they’re gonna start racking up a bunch of useless debt and and you hear all the horror stories of people misusing credit cards and again.
How To Use Credit Card?
Now we need to understand how all of these tools work and how the big banks big corporations the government? How they use that against us to extract money away from us ?You know so that way, we live paycheck to paycheck and our slaves do our job and slaves to taxation from the government I could go on and on about that. There is a system working against us that is extracting money away from you. You know more of your hard-earned dollars in your pocket versus handing it over to the banks and interest.
So let’s talk about the four reasons I so I want to help you not get into trouble with your credit cards because so many people make the number one mistake which is using credit cards to buy liabilities which are things that cost you money you know you use your credit card to you know buy your big-screen TV.
I’m getting charged interest and then now that interest is on your balance and then let’s say you make a minimum payment . Now that interest that was there. You’re starting to pay interest on interest and you’re starting to fall into the trap and this is where the banks make a lot of money. You know they say that compound interest is the eighth wonder of the world. Well this is how the banks or a compound interest on you, when you maintain that credit card balance.
You don’t pay it off at the end of the month. They’re able to charge your interest and racks ups on your balance. When you don’t pay that off that interest is still there, they’re charging interest on interest that is compound interest that the banks are getting you.
I’m around a lot of investors and investors leverage lines of credit to acquire businesses to make investments to do real estate transactions. They use lines of credit to lend money on deals. I see that quite often so and as far as acquisition of assets again. You can utilize and leverage your lines of credit . Let’s say you’re in a very very good credit scenario.
Interest offers And Line of credit
You’re able to get 0% interest offers there are several people in my network that will use those offers right themselves zero interest zero fee you know checks you know to themselves and then lend it out on real estate transactions and from there they’re earning a fantastic rate of return leveraging other people’s money.
It’s not even their money they’re leveraging the line of credit. They’re able to get a nice rate of return there and then pay back. So let me just disclaim that newbies shouldn’t necessarily be money you need to know. What you’re doing before you’re lending because you really need to know those numbers and make sure that they work. It is something that you can do and as far as acquisition of real estate. You can absolutely acquire our assets you know and again in good credit standing. You could write those write those checks to yourself to put down payments on assets.
Leverage Your Expenses
If your bank or lender is requiring that that just adds a little time to your scenario but the bottom line is we want to leverage our lines of credit to acquire assets and the great thing about assets as assets are things that make us money. That’s usually the first thing people think of but the bottom line is emergencies are going to happen and and that’s why we want to have a credit card on hand. So even if you’re not somebody that’s didn’t go out there and invest or wants the leverage lines of credit to to invest and do other things. It’s always nice to have us a leverageable tool available to you right and from there that you can have in case of an emergency. So it is something that is a great addition some folks will use a line of credit as their emergency fund. They have a credit card available they just don’t touch it.
Where we need to be responsible just because there’s a sale on that on that Louis Vuitton or a sale on this and that that that’s an emergency right. You know reserve lines of credit for actual emergency’s. You know the third reason that we’re gonna use lines of credit is to rack up points and rewards okay and you can run your transactions through there. if you’re going to consider doing this running your all of your transactions through your line of credit.
Here you need to be disciplined and use this tool with responsibilities you could leverage it for all of your expenses. So that we could rack up points and rewards and then take all of your income and pay off that line of credit every single month in full. So that way you don’t have to pay any interest payments or anything like that. You’re able to literally just pay your bills as you normally would but you’re just running them through a line of credit. So that when you can get those rewards and again now let me say this the minute that your cash flow situation changes the minute. You’re in a situation where you’re in a negative cash flow center. Where you have more expenses than you do in income coming in the thought process around racking up them points needs to change a little bit .
Interest pay And Amount of Rewards
When you start leaving a balance on those lines of credit and you end up having to pay interest when you look at the interest you’re paying versus the amount of rewards and go for those rewards but if it’s ever gonna be a scenario when you’re thinking about that.
If you’re gonna end up paying interest on that line again you’re gonna want to stop doing that because we’re not able to pay out that balance in full every month. You only want to be taking really real advantage of those programs when you’re able to pay that balance off in full every single month and the fourth thing that we can use our lines of credit for is to eliminate and reduce debt.
so if you have other debt student loans car loans your mortgage. You can leverage lines of credit to take big chunks out of those loans and bring them over to your line of credit applying strategies like velocity banking through leveraging of the line of credit. You’re going to start then putting all of your expenses on the line you’re gonna start sending all of your income to the line. You must have positive cash flow every single month to do this but your line of credit balance will go down by your positive cash flow every single month. Now in some scenarios we will play some interest on this line of credit but when we’re pulling big chunks off large amortized loans we are able to save a ton of money and interest. Now let’s say if you have a fresh mortgage those first several years of any loan the the large majority chunk of your payment is pure interest going to the bank and so if we’re able to knock down principal especially early in a mortgage or entering a loan we’re able to save a boatload of money in interest or off of the overall life of the loan so this is a great place where you can leverage a line of credit in order to reduce your debt and save a ton of money in interest.
So how you properly use a credit card and those are the four reasons that you should be using a credit card. If it’s for any other reason you’re just running the risk of racking up a bunch of needless debt. You’re gonna end up paying interest on now if you want to learn more about credit now to improve your credit score.