Why Should You Establish Secured Credit Cards?

by Mack Bartlett

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I think the bigger question is Why should you have credit cards at all? Think about it. What is the point of using a financial tool when all that tool does for most of the people that use it is get them into high interest debt? Debt from which most of them never recover? Let’s cover that before we cover why you should establish secured credit cards.

Credit cards are a curse for a lot of people out there. They opened a few when they were in college (because filling out the application got them a free tee shirt) and they ran up some balances. Maybe they got those balances paid off while they were in college, and maybe they didn’t. Then they graduated and nailed down their first job.

With that first job came some kind of salary, and with the salary came the belief that they could ‘afford’ nicer things than what they had during four years of poverty at school. So they get higher limits on their credit cards and they buy nice furniture, new clothes, etc. Now they probably have balances that will take years to pay off, if they ever pay them off at all.

In my line of work I talk to people about their credit cards a lot. One thing I hear is “I made some mistakes with credit cards in college so now I refuse to use them.” What? These people are basically saying “I’m an undisciplined slug that can’t handle a credit card so I have to hide them in a safe deposit box.” C’mon, people. Do you use the credit card or does the credit card use you?

Credit Cards Should Be Your Best Friends.

Let me just give you two examples of why you should love your credit cards:

1. Rewards and Sky Miles. It is my mission in life to find ways to use my skymiles card. Nothing makes me happier than flying to fun destinations with my wife and letting the credit card company pick up the tab. I recommend opening a card that doesn’t cap the number of miles you can earn. Also make sure the miles never expire. It may take time to get enough miles to earn that free first class ticket to Europe.

If you’re not into traveling much, get a credit card that rewards you with cold hard cash. 1% back isn’t much, but it’s money for dinner and a movie.

2. Buying advertising for a business. I’ve had a busines online before that allowed me to spend as much as $1000 per day on advertising. Trust me, at the time I didn’t have $30,000 per month in my bank account to buy that advertising. Luckily I had opened a credit card with skymiles and I put all of my ad costs on it. I was able to make a healthy profit thanks to all that advertising, and I got a few free plane tickets out of the deal as well.

So Why Establish Secured Credit Cards?

One simple reason: secured credit cards open the door for you to be able to do the things I just talked about. If you’re in a position where you’re looking for secured credit cards, it probably means you can’t qualify (yet) for a great credit card with rewards. Use a secured credit card to open that door for yourself.