If you want to change your credit card habits, imitating how wealthy individuals use their credit cards is a good place to start. Although each wealthy individual is unique, many of them share many common characteristics.
We discovered what wealthy people do differently with credit cards through studies and interviews. By imitating these practices, you may be able to obtain significantly more value out of your card
Don’t believe the misconception that wealthy people don’t use credit cards. Credit card use is most prevalent among people with higher incomes.
According to the 2018 TSYS® U.S. Consumer Payment Study, credit cards were chosen as the preferred payment option by only 26% of consumers overall. However, 55 percent of individuals earning $150,000 or more each year chose credit cards.
Credit cards are the best choice for practically every payment because of their advantages over debit cards and cash. Most have zero-liability policies in the event of fraudulent charges. Many of them also provide incentives and purchase protections.
The danger is that you will end up with high-interest credit card debt. This is where the following habit comes in handy.
One of the most essential credit card habits is that wealthy people pay off their entire balance by the due date. You prevent credit card interest and late fees by doing so.
Tom Corley, an author, and financial adviser spent years studying the financial patterns of the wealthy. He discovered that 95% of the wealthy persons he studied paid off their credit cards in full. Only 10% of the low-income persons he studied did the same thing.
Corley’s study also discovered that wealthy people are considerably more inclined to use incentive credit cards. He found that 81 % of the wealthy persons he investigated utilised a rewards card, compared to 9 percent of the poor.
The wealthy, like ordinary consumers, use many types of reward cards based on personal choice. Many of them prefer cash back credit cards since they can easily spend the money they earn. Some people prefer to use travel rewards cards if that is what they like.
This is yet another habit that everyone might benefit from adopting. You can earn money or points on your everyday purchases by utilizing a rewards card. It’s an easy method to earn more value out of the money you’re already spending, so a rewards card is practically a need.
For new cardholders, several credit cards provide sign-up bonuses. These cards often offer a bonus once you spend a certain amount of money in a certain amount of time. For example, if you spend $5,000 in the first three months, you could receive $500, or 100,000 points if you spend $10,000 in the first year.
Wealthy individuals seek to optimize their return through perks such as these. Because they frequently spend more money than the average consumer, they can also obtain the most lucrative perks that necessitate a higher level of expenditure.
Keep in mind that you should only accept bonuses with spending restrictions that you can meet with your regular expenses. If you can’t, wait until you have a large purchase to make before applying – or choose a card that doesn’t require as much spending to obtain the bonus.
Not all wealthy people use high-end, premium credit cards. Some people are perfectly content with high-quality no-annual-fee credit cards. However, some people choose cards with high annual fees and numerous bonuses. In fact, there are invitation-only credit cards available only to high-spending individuals.
But you don’t have to acquire the most expensive card on the market to take advantage of this habit. There are a plethora of credit cards available with modest annual fees that provide enough benefits to make you money, assuming you can use those benefits. If you’ve never explored any cards with annual fees, it’s worth looking into what they have to offer.
There’s no reason why these credit card behaviors should be exclusive to the wealthy. The majority of these are practices that everyone can embrace. The final option, obtaining a card with an annual cost, is not for everyone. However, if you locate a card that fits your lifestyle, it could be a smart option.