This is a rewrite of an email we sent (nudge nudge: sign up for our emails)

Let us share a story about two people we know. A young, freshly married couple decided they wanted to travel the world. Their solution? They got a credit card. Their logic was simple: “We’re spending money anyway, so why not put it on a card, pay it off immediately, and rack up miles? We’ll essentially travel for free. Win-win, right?”

Sound familiar?

Initially, everything seemed to go according to plan. But then, the couple who previously had no extra money now had what felt like unlimited access to funds. A trip to Disneyland? Just put it on the card. Need a new TV? Instead of saving, use the money that would have gone into savings to pay off the card. After all, they just got paid, so they must be good.

You see where this is going, don’t you? They got miles, sure, but they also accrued thousands of dollars in debt. Instead of jet-setting to new destinations, they found themselves scraping together money to pay off their balances.

So what were they to do? Put their cards in ice a la Confessions of a Shopaholic?

Wrong. The issue wasn’t the card; it was their lack of responsibility. They treated their card like a get-out-of-jail-free pass: live it up today, pay it off tomorrow. 

Let’s be real, this scenario isn’t unique to newlyweds; it happens to business owners all the time. We crave the perks of business credit cards but shirk the responsibility of managing our spending and understanding our finances. 

But those business card benefits are awesome. So let’s work on ourselves so we can reap those rewards (responsibly). So without further ado here’s our best credit card advice:

1. Know what you earn. You can’t spend accurately if you don’t know your income. It’s not a matter of IF you’ll overspend, it’s a matter of when. 

2. Know what you’re spending before you spend.  Understand that you’re not spending to earn. It’s simple logic: spend $15 to get 5% back (saving 75 cents) or spend nothing and save $15 (saving $15). What purchases are you justifying because of the perceived benefits?

3. Find the right card. Love to travel? Look for a card with excellent travel rewards. Prefer cash back? Choose accordingly. Consider annual fees and whether your rewards will offset them.

4. Maximize points wisely. Put as much as possible on the card to maximize points, as rewards aren’t taxable. But only do this if you can manage it. If you’re spending to earn, it’s not free money—it’s unnecessary spending.

5. Know your limits. This is where our couple went wrong. They wanted to believe they could manage it, but they had no savings and were already living paycheck-to-paycheck. They weren’t in a position to pay back a credit card debt.

What do we wish this couple had done differently? We wish they had treated their credit card more like a debit card. This would have helped them spend within their limits, pay off their balance every month, stay clear of unnecessary credit card debt, and still earn great rewards on credit card purchases.

As money nerds, we love credit cards and highly encourage them. We simply issue a warning of caution when using them. If you follow the tips outlined above you’ll be in great hands! 

Let’s eliminate the stigma around credit cards and take responsibility for our financial choices. You’ve got this!