MoneyMinding Monitor

With the debt crisis getting a great deal of attention in the United States, we often get sent publicity leads that ask for some expert financial help on credit and debt issues.  Here is one that came from a website geared to newlyweds - I’m posting our answer below.

 I’m looking for a prominent financial expert to guide young newlyweds on choosing the best credit cards (what to look for, rewards, interest rates, etc.).

Choosing a credit card should require the same research and planning as does choosing an investment or making a mortgage decision.  The problem people have with credit is largely because it isn’t part of a strategic plan. 

Credit card debt isn’t bad – it is an excellent tool to recognizing lifestyle choices, and access to credit is a fabulous tool to create wealth or to reach personal goals.   For example, if you are choosing your first card as a newlywed couple, now is the time to take a look at your goals - what are you working toward?   Is it travel?  There are cards that collect travel rewards.  If your goal is a new car, you can get a card that will reward you with a cash rebate when you make your purchase.  If you are building or renovating, you can even get affinity cards for hardware stores. The choices seem limitless. So pick your goal first, and then go shopping for your cards.  Once you have your cards, then develop a strategy to maximize the benefits you receive while creating a spending system that fits your lifestyle. As for interest rates, they matter less when you carry a low balance or none at all, and they are just part of the equation when factoring the return on investment you receive from purchasing on credit.  If you use your credit card for business purchases, what is the income that is being created as a result of that purchase?  And, if you are making a lifestyle purchase, the same applies:  what is the benefit you will receive as a result of the purchase?   Finally, one way to stay in control of your credit use is to ask yourself first how and when you will pay the bill.  How many hours, days or weeks of work will it take to make the money for your purchase?  And of course plan ahead so your credit cards become a strategic part of an overall financial plan.