If you're looking to adjust your credit card habits, mimicking the ways rich people use their credit cards is a great place to start. Although every rich person is different, many of them share several common habits.
Using studies and interviews, we've found out what wealthy people do differently with credit cards. By emulating these habits, you might get far more value from your cards.
1. They use credit cards whenever they can
Don't be fooled by the myth that rich people don't use credit cards. Credit card use is most common among those in higher income brackets.
According to the 2018 TSYS® U.S. Consumer Payment Study, only 26% of consumers overall chose credit cards as their preferred payment method. But among consumers making $150,000 per year or more, 55% preferred credit cards.
Considering their advantages over debit cards and cash, credit cards are the best choice for almost every payment. Most have zero-liability policies for fraudulent charges. Many of them also offer rewards and purchase protections.
The risk is ending up with high-interest credit card debt. That's where this next habit comes in handy.
2. They pay their credit card bills in full and on time
Rich people overwhelmingly follow one of the most important credit card habits: They pay off their entire balance by the due date. When you do this, you avoid credit card interest and late fees.
Author and financial planner Tom Corley spent years learning about the financial habits of the rich. He found that 95% of the rich people he studied paid their credit cards in full. Only 10% of the low-income people he studied did the same.
3. They use rewards credit cards
Corley's research also found that rich people are far more likely to use rewards credit cards. 81% of the rich people he studied used a rewards card, compared to 9% of low-income people.
Like other consumers, the wealthy use different types of rewards cards based on personal preference. Many of them like cash back credit cards because of how easy it is to use that earned cash. There are also those who go with travel rewards cards if that fits their preferences.
This is another habit that everyone would be wise to follow. By using a rewards card, you can earn money or points on your regular spending. It's a simple way to get value out of money you're spending anyway, so a rewards card is practically a must-have.
4. They take advantage of big bonuses with high spending minimums
Many credit cards offer sign-up bonuses for new cardholders. These cards typically reward you with a bonus after you spend enough in a set period of time. For example, you could earn $500 for spending $5,000 in the first three months, or 100,000 points for spending $10,000 in the first year.
Wealthy people look to maximize their return through bonuses like these. Since they often spend more money than the typical consumer, they can also get the most valuable bonuses that require a larger amount of spending.
Remember that you should only go for bonuses with spending requirements you can meet through your normal expenses. If you can't, it's best to wait until you have a big purchase to make before applying -- or choose a card that doesn't require spending as much to get the bonus.
5. Some pay expensive annual fees for high-end credit cards
Not all rich people go for the high-end, luxury credit cards. Some are perfectly happy with quality no annual fee cards. But there are also those who choose cards with expensive annual fees and extensive perks. In fact, there are even invitation-only credit cards that are just for big spenders.
But you don't have to get the fanciest card on the market to capitalize on this habit. There are plenty of credit cards out there with manageable annual fees that offer enough benefits for you to come out ahead, provided you can use those benefits. If you haven't considered any cards with annual fees before, it's worth checking out what they offer.
There's no reason these credit card habits need to be exclusive to the wealthy. Most of them are practices everyone can adopt. The last one, getting a card with an annual fee, isn't for everyone. But it could be a good idea if you find a card that fits your lifestyle.
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