It has been two months since the beautiful balance of $0.00 first appeared on my credit card bill. It has felt great and there has been no looking back. Honestly, my relationship with my credit card changed back when I cut it up and started aggressively paying it off so I feel confident there will be no more credit card debt in my future.
So where do I go from here?
To maintain and improve my credit, I have not closed my credit card account because it is my longest form of credit. But staying at $0 isn’t helping my credit either. So to continue improving my credit, I will be getting myself a new card and applying it to my Netflix and Hulu bills each month. I will set up automatic payments so it never has to be worried about but it continues to show that I can use and handle credit responsibly. Then I will cut up the new card and be done with it.
However, after a lot of consideration and research, I know that I trust myself with credit. Now I am responsible about spending what I have and honestly the idea of spending excessively just to spend is unappealing. I was inspired by I Heart Budgets to finally make a credit card work for me for once by taking advantage of credit card rewards!
Now, I know that’s risky for someone who is so recently out of credit card debt but I’ve learned my lesson and know that this strategy will actually save me money. My sister and new brother-in-law are living in England for the next 2.5 years and I want to visit them (they will not be coming home at all during that time). I estimate a ticket will cost me roughly $1,000 plus costs during travel, and the Euro is almost 2:1 to the dollar. That will be a big chunk out of my savings, which although I will have, I’d rather use it more intelligently.
So here’s my plan:
I recently signed up for the Barclaycard Arrival credit card, which offers a generous sign up bonus (40,000 miles if you spend $1000 in the first 3 months = nearly $400 in airline tickets) and 2 miles for every $1 spent. The points are flexible for any airline, no blackout dates and the annual $89 fee is waived for the first 12 months. 0% interest for the first year is also included but that has no significance because I will never carry a balance!
This card will purely be used for expenses I already have that are regularly budgeted for. For example, it turns out my recent medical bill, which I fully have the money for can go on my card to get the points and then I can pay it off right away. I guess there is a silver lining to those darn bills! I will also usually put our groceries on this card since I usually do the shopping anyway. Although I don’t spend a lot these days, I am confident I can get the sign on bonus and eventually earn enough points to fly to Europe next year for FREE!! And since this card does not represent my credit history, I can close the account when I’m finished with my trip – if that’s what I decide. Travel is important to me so getting occasional free flights might be worth keeping the card.
Conveniently, my girlfriend Lenka (from our Dallas trip) has enough frequent flyer miles to travel to Europe and wants to join me on a little Euro trip when I visit my sister! We will start in England and then my sister will join us and we’ll go to Amsterdam and Oslo, since Lenka has Norwegian heritage and has always wanted to go. Since traveling Europe will certainly cost more than simply visiting my sister, I’m adding to my credit card reward plan.
I will eventually be signing up for the Hyatt Credit Card, which rewards you with 2 free nights at any Hyatt hotel worldwide after spending $1,000 in the first 3 months. We can stay with my sister in England for free, I can cover a free Hyatt hotel in Amsterdam and Lenka happens to have a lot of credit card points stored away to cover a free hotel in Oslo! That will leave the remaining expenses to come from my savings without causing as big of a dent, while giving us the trip of a lifetime! Then when I come home I can close the account and go on my merry way!
Since I’m still actively working to pay off student loans, I will constantly be reminded of the consequences if I don’t manage my credit well. I’m so happy to experience a whole new relationship with money, where I make it work for me instead of being a slave to it. Here’s to a new chapter and affordable travel!