Two types of credit card users

In my line of thinking, there are just two types of credit card users. The first group is the most common – people who carry a balance month-to-month. These folks often pay the minimum payment on their credit card bill, whether out of ignorance or inability to pay more. Often, the balance doesn’t go down monthly; it goes up instead. These people are simply digging themselves deeper and deeper into credit card debt. Instead of credit being a valuable tool, these people see credit as a noose, and it gets tighter and tighter every day. You do not want to be this type of credit card user.

The second type of credit card user is the smart one. He uses credit to his advantage. He sees credit as a tool, and not as a crutch. He pays his balance off in full, every single month. To him, credit allows him to make one single payment every month, and track his purchases very carefully. It’s easy to see where your money is going when you get an itemized bill every month.

In addition to not carrying a balance, the second type of user generally uses some sort of reward credit card. Whether he gets points, airline miles, or even cash back, the second type of credit card user actually makes money by using his cards, instead of paying interest.

Granted, if every type of credit card user was the second type, then we’d likely see a drastic change in credit card programs and policies. Reward programs would get much less lucrative, or even disappear. Annual fees would come storming back. The credit card companies might even introduce all kinds of new, never before seen fees, just so they can earn a profit. See, the first type of user balances out the second type, and enables them to come out ahead. Even so, I’d definitely urge you to join the ranks of type 2, and avoid being type 1. If you are currently a type 1, please stay tuned for some tips to get to the other side.