Yesterday I wrote about the 5 types of credit card users from the credit card company perspective. At the end of my article, I stated that I am a Max Payer. I only charge items to my credit card that I have the ability to pay for immediately. If I don’t already have the money to pay for my purchase, I won’t charge it. I prefer using credit cards instead of cash because it is safer, and I get cash back rewards. There are many other benefits of using credit cards – as long as they are used appropriately.
Today I ask my readers, which of the 5 types of credit card users are you?
- Max Payers – pay in full on-time, every time: Congratulations! You have the good fortune of being able to use credit cards as a tool, and possibly even profit from cash back, rewards points, miles, or other incentives . Keep up the good work!
- Revolvers – always carry debt: Being in this group is hazardous for your financial health! Only making minimum payments will stretch your debt out for years, if not decades. To get out of this cycle, start paying more than the minimum amount on your credit card bills and try to get it to the point where you can pay them off completely. It will take hard work, but the reward of no longer paying high interest fees or having debt hanging over your head is well worth it. Next, you can work toward becoming a Max Payer – and letting the credit card companies pay you instead! (or, if you prefer, becoming a member of the last group, The Non-Users).
- Deadbeats – never pay, nor have any intention of paying: Obviously, Deadbeats are the worst type of credit card customer for everyone involved. Deadbeats are thieves who use credit cards to ring up debt they never plan on paying. They often break they law to do this, and if they are using stolen cards or used fraudulent means to obtain the cards (such as identity theft), they can easily ruin an innocent person’s credit. Deadbeats also cost credit card companies, law enforcement agencies, and ultimately other credit card customers and tax payers millions of dollars. Pay your bills! Seriously, you are harming yourself and others.
- The Arbitragers – game the system to make money from 0% balance transfers: Making money from credit card companies. Beautiful. Just make sure you play by the rules and don’t mess up, or you will find yourself with a big bill that will erase your profits and possibly hurt your credit rating. You should only be a member of this group if you know what you are doing. As a side note, most members of this group are also members of the Max Payers group.
- The Reformed Credit Card User, or, the Non-User: Once bitten, twice shy. Some people have had bad experiences with credit card debt and now realize they shouldn’t risk the temptation of an easy line of credit. You know what is best for your situation. If you don’t want the temptation or feel like you can responsibly use a credit card – then don’t! I admire people who know themselves well enough to make a decision that is in their best interest – and stick to their decision.
Which type of credit card user are you? Credit cards are tools – nothing more. However, just like any other tool, you should use them properly to achieve your goals. Some people make money using credit cards, and others shouldn’t use them at all. Ask yourself which type of credit card user you are, and answer honestly – it is you who has the most to gain.