Most of the rich can easily afford to pay cash for every purchase. Despite this, even the wealthy regularly use credit cards. Here are four big reasons why.
1. Credit cards offer a 30 day float
When you load something onto a credit card, you don’t pay interest right away. As long as you pay your statement balance on the due date, you owe no interest on any purchases. Typically, billing cycles are on a 30-day schedule, so you can basically borrow money without interest during those 30 days.
Many wealthy people take advantage of this to better manage their cash flow while actually getting a short-term interest-free loan. Why not take advantage of someone else’s money for a month so you have more freedom to do whatever you want with yours?
2. Credit cards earn you rewards
Credit cards offer generous rewards for everyday expenses, especially for wealthy people, who generally qualify for the best rewards cards. Most of the rich don’t waste an opportunity to get free money, even though they already have a lot of it. They take advantage of the rewards cards to get cash back or earn free trips.
The rich can benefit more than the average earner from credit card rewards because they charge a lot. If your card earns you 2% cash back and you spend $ 100,000 per year, you can earn a lot more rewards than the typical card user.
3. You can create credit with your cards
Even rich people enjoy a good credit rating. This is because many types of businesses, including utility and cell phone companies, factor in credit. The wealthy also often take out mortgages or other tax-advantaged loans with low interest rates. Building credit helps them get the best possible rates for strategic borrowing.
Credit cards are a great tool for building credit because all you have to do is pay them off on time and not use too much of your available line of credit to improve your credit score.
4. Credit cards often come with generous benefits
Credit cards can offer many benefits, especially cards with high annual fees that the wealthy are often willing to pay.
Some cards come with personal travel assistants or concierges that help book special trips or provide access to member-only events. They could offer early access to concert tickets or open the door to airline lounges. While wealthy people can get these benefits elsewhere, it’s easy to get a credit card and enjoy all of these benefits.
If you aren’t already using credit cards like a rich person – as a tool to build credit, earn rewards and benefits, and spend interest-free for a while – maybe now is the time. And as long as you don’t have a balance and end up with high interest charges, you can get all of these benefits too.