Credit Cards Pro / by kevin murray

I remember with great joy when I received my first credit card back in the day.  Finally, incredibly, American Express was willing to take a chance with me.  As soon as I received the card, I just had to use it, even though there really wasn't anything that I absolutely needed.  I decided to purchase a book and thereby use my card, and, by Jove, the bookstore accepted my payment by credit card.  Sweet.


The original American Express card conditions stated that you had to pay off your balance in full with each statement, so that it behooved you to use a little trick to delay the inevitable.   Since my budget was tight, it was pretty easy to learn that in order to extend my payment out for another 20-30 days, the simplest way to do that was to recognize my billing cycle and make my expenditures right after that cycle ended.  So if the billing cycle ended on the 20th of the month, the stupidest thing to do was to buy something on the 19th or 20th of the month.  Doing that, you'd be stuck with the bill almost in real time.  No, I liked to float the money by making my purchases right after the 20th, which worked out real well for me and gave me a little cushion.  Of course, when I finally got the bill, sometimes I looked at the items and thought to myself, dang, I bought that weeks ago and it hardly seems fair to make me pay for it now.  I mean, really


Since that time I've received and utilized many credit cards.  The biggest difference is that over time the annual fees went away and instead I've gotten some lucrative points/bonuses just for having a certain branded credit card.  The only credit cards I carry now with an annual fee are ones that I have received a big incentive such as two roundtrip airfare tickets.  That will keep me in their good graces for a short while, but unless they have some additional come-ons to entice me, I usually end up canceling the card after getting my benefits and moving on.


Having said all that, the most amazing thing about credit cards is the monetary credit that is given to you.  I'm not saying that my family and friends are a bunch of tightwads and uncaring, but when you request a little money from them, as I have in earlier times, they look at you in a completely different way.  It's almost like you're some sort of degenerate, loser, cheater, and hustler all rolled up into one.  But with a credit card company they treat you with respect.


You know the old saying that there isn't anything free in life, so when you use credit cards without an annual fee and you do pay your balance in full each month, plus you get points as a bonus, you do wonder to yourself, how is it that they make a profit on me.   The short answer is they don't.  The only fee that they make directly on your account is their portion of the merchant fees when your card is used.


To demonstrate further how good I've got it, every once in a while I screw up on my payment, in which I accidently just pay the minimum, or don't click through enough windows so the payment doesn't even go through.  What I have found out is if you only make that mistake once in every twelve months a courteous phone call will often get the problem rectified.  So I screw up, I call them, apologize, and make the complete payment, whereupon they will forgive the interest, penalty, and late fees. 


So if they are doing all that for me, how is it that the credit card issuers are making money?  That's for Part II.