How Credit Cards Can be a Big Tool

Steve Cummings

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Someone recently posted a comment on my blog asking, “Do you think it is a need to have a credit card even if I am not borrowing money?” That question helps me to reflect on things people have told me about credit cards, what I have learned about credit cards, and the rewarding nature they provide. Here is why I think credit cards can be a big tool for your finances.


I do not endorse overspending, maxing out your cards, or even not paying your bills on time. Credit cards should be a tool. If you abuse the tool you will be stuck with massive debt, heartache, broken relationships, and negative assets. Please use credit cards wisely, and pay them off at the end of the month in order to avoid massive credit card debt.

Building your Credit

One thing credit cards are great at is building credit. It is a tool to make your credit go from 700 to possibly over 800. I have opened up credit cards mostly for their points and rewards, but the cool thing is that my credit score has skyrocketed to over 800. 

A credit score is based on five different factors. It is based on your credit history, amount of credit being utilized, payment history, new credit, and a credit mix.

You just need to be able to use less than 30% of your credit, pay the bills on time, and not close some of your oldest accounts and your credit score will improve.

These things can help boost or punish your credit score. The cool thing is that credit cards are a tool to help create a better credit score. 

With a better credit score in the U.S.A., you are able to get lower interest rates on loans with the bank. Let’s say you want a mortgage to buy a house, a bank is going to take a look at your credit to determine if you are worthy and a safe investment. 

With a higher credit score the bank will give you a better rate. A lower credit score will help the bank give you a higher rate just because the credit score does not show if you are as trustworthy as other people with higher scores. 

Take a moment and think about how credit cards help enhance your credit score and be able to save money for your future self.

Credit Cards can be Rewarding.

In the past three years, I have bought nine free flights with points and miles through credit cards. That is a massive amount of saving money and being able to do something that I enjoy, traveling. 

Right now, I am sitting with 60K miles with American Airlines, 90k points with Chase, and looking to do some more traveling soon enough. These points and miles were all accumulated via credit cards. 

Credit cards have the cool thing of being like a debit card but offering great rewards for using their card. 

I have the Chase Sapphire Reserve, which is my go to card. It gives me 3x points on travel and dining. If I use the points in their travel portal it will give me 1.5 cents per point. If I transfer it to one of their partners I can get close to 2 cents per point. 

At 90K points with Chase that will give me about $1,350 for travel I could spend. That is a lot of money to go and travel. 

Credit cards are not just valuable for the rewards they give you when spending in certain categories like my Chase card. They also give you bonuses. 

When I signed up for the Chase Sapphire Reserve, they were offering 50,000 points after you spend $4,000 in 3 months. 

If you are like me and do not spend much money, this could be a hard task to tackle. That is why I wait until I know I will make a big purchase, get a new card and make sure I hit the bonus. 

Hitting the bonus is a great way to be rewarded by credit cards. It is free money. 

Like I said in my disclaimer, do not spend unless you can pay the bills on time. 

These rewards add up and it builds value in the cards you use. Instead of paying with cash, I am reaping even more benefits from the card giving me back some of the cash and allowing me to take free trips, and enjoy life even more.

Credit Cards can help with investments:

Recently I found out that Fidelity offers a credit card with 2% cash back that can go into your investment account

Quite simply this is a new hack, I had not thought of. 

You have cards out there like the Chase Freedom Unlimited Card that gives you 1.5% back that can be used as travel points if combined with the Chase Sapphire or Chase Sapphire Reserve. 

There is also the Citi Double Cash card that gives 2% back on everything. 

Fidelity’s card does the same thing as both of these cards. They give you 2% back on everything and the big bonus is that you can put this money into your IRA or even into your taxable brokerage account. 

That is a huge win. You are already spending money, why not reap some rewards that will also compound over time. 

Most cards have certain categories that will give you a bonus, but the Fidelity gives you 2% back on everything. If you want to rack up some extra cash for your investments take a look at this card.

Credit Cards provide Insurance.

One of the great things that credit cards provide is a type of insurance. This can be a warranty, travel insurance, or even a certain time limit for a return. 

It is the bank’s money, and they like happy customers. The plus is that they like people spending money, and the more value a card provides the more a person is likely to use their card. 

I have the Chase Sapphire Reserve. It has a travel insurance componet and a primary rental car insurance as well. So if I were to rent a car, it would be covered under the credit card as long as I use the card to make the purchase. 

The travel insurance one really saved my day. My wife and I took a trip to Antarctica in March, and do to the pandemic many flights were canceled. Chase was very gracious to help get all of that money back for us on our canceled flights. They sold me right there.

The Not so Good Thing About Credit Cards.

Credit cards have a negative connotation in some finance circles. People that struggle with debt, and finally get out of debt are all about the cash is king mentality. 

I understand those thoughts. Many countries are a cash only place, but many countries have credit cards that will reward you for spending money. 

The bad parts about credit cards are the interest rates. Lots of the cards can have a high interest rate like 18-25%. That is massive. Companies are in the hope that people may just pay the minimum. What happens is that the rest of the balance starts to collect interest. That is when people start to get screwed. 

If people are not wise with their money and over spend they will not be able to pay off their balance at the end of the month. It is always best to pay the balance at the end of the statement in order to avoid the interest.

My Two Cents Worth:

These are some of the reasons I think Credit Cards can be a big tool for your finances. I have left a negative as well, and it is all about being focused and paying your balances off at the end of your statement. 

Take a moment to think. Create a plan for how you can use a credit card to enhance your finances. Always remember to pay it off at the end of the statement. Avoid bad debt.

” Spend less than you make, stay out of debt, and invest the rest”

2 thoughts on “How Credit Cards Can be a Big Tool”

  1. Hi Steve, I can’t express how grateful I am to have you make an article on my question.
    There’re actually some more questions popped up in my head as I read through the article, but this time I’m going to do some research on credit card first (especially those issued by banks in Taiwan) and come back to you. 🙂
    Thanks for great knowledge sharing again!

    • Tommy,

      You asked a great question a while back, and I wanted to answer you. I am not all that familiar with cards in Taiwan. I have heard of a couple like Pi Card from E-Sun Bank. Please let me know if you find some other good ones.


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