Never Pay Credit Card Interest with this Simple Trick
This article may contain references to some of our advertising partners. Should you click on these links, we may be compensated. For more about our advertising policies, read our full disclosure statement here.
Last week, I wrote an article that claimed nearly everyone needs a credit card. And to be honest, it wasn’t all that controversial.
I merely explained how difficult it can be to rent a car or get hotel reservations without some form of credit, and how certain perks, such as travel insurance, fraud protection, and rental car insurance can be lucrative and beneficial.
But my post ended up on Yahoo News. And not surprisingly, the freaks came out of the woodwork to tell me I was wrong, and argue that credit cards are nothing more than a huge scheme. Here are a few of the gems:
“Credit cards are just another money making scheme, they know people are going to max them out and they will be happy to let you pay the interest. ”
-Jimmy Mack
“I’ve done without one for years. We all pay with higher prices for the “perks”. Or do people think money grows on trees? Never mind, this is America we’re talking about. Go lick a banker’s boot.”
-Francis
“For every dollar cash back you pay several times that to the credit card companies. There is no free lunch.”
-Valhalla
Are Credit Card Perks Free?
I’m not arguing that credit card perks don’t come at a cost. Obviously, someone out there is paying for them in one way or another, either through credit card interest, annual fees on cards, or other means. Meanwhile, retailers who accept credit as payment must fork over 2 – 4% of each transaction to the card issuer, which is undoubtedly a whole lot of money over the weeks, months, and years.
Those costs generally get passed onto the consumer, which means higher prices. But boycotting credit cards isn’t going to change that trend any time soon. Credit cards are surely here to stay, so you’re forced to pay that extra 2-4% unless you can work out some sort of cash-only discount. Why fight the inevitable?
And you know what? If you never pay interest on your credit card, and choose cards that do not charge an annual fee, you can pretty much rob credit card companies blind every year. And I should know.
Scoring Big with Credit Card Rewards
Last year when we were stranded in Jamaica for two extra days due to wicked winter weather, the travel insurance offered by my Chase Ink Bold card picked up the tab for the $580 it cost us to spend two additional days. And, have I ever paid them interest? Well, hell no. Of course not.
And each time I rent a car, I always use a card like the United MileagePlus Explorer card that offers primary rental car insurance to pay. Why? Because it offers the coverage free of charge.
In addition to those perks, I cashed in over $20,000 of points, miles, and cash-back in 2014, all while traveling to places such as Jamaica, Orlando, Denver, London, Paris, New Orleans, and Minneapolis, and all without paying a cent of interest.
Someone is paying for those perks – true – but it sure as hell isn’t me. And it doesn’t have to be you either.
Never Pay Credit Card Interest with this Simple Trick
Complaining that the 2-4% retailers pay to use credit gets passed onto consumers doesn’t change the fact that it happens every day. The only way to end up ahead is to find a way to use credit to your advantage; sign up for a simple cash-back card, pursue travel rewards, or use some of the other benefits credit cards offer, such as price protection or rental car insurance.
And if you want to avoid paying interest and score all of the perks that rewards cards offer for free, all you need to remember is this:
Pay your credit card in-full and on time. Every. Single. Month.
Never put more on credit than you can afford to pay off immediately, and never use credit to buy anything you cannot truly afford. Don’t use credit as a crutch to get by when you are struggling, and never use it as en excuse to spend more than you would otherwise. Remember that only you have the power to avoid paying interest. Seize that power, take credit seriously, and refuse to become another statistic in the sad, sad world of credit card slavery.
If you’re unable, you’ll simply be paying for the rewards of others. Sure, someone has to, but that 
doesn’t mean it has to be you.
Do you ever pay interest on your credit cards? Does it make you angry that credit cards exist?
Additional reading:
- Chase Ultimate Rewards
- How to Pay Your Mortgage with a Credit Card
- Best Credit Card Rewards Offers
- Best Travel Cards
- The Ultimate Guide to Chase Ultimate Rewards
- 5 Reasons to Get the Starwood Preferred Guest Card
- How to Use 50,000 American Airlines Miles
- Credit Card Denied? Try This…
- Credit Card Rewards: Our Budget Travel Plans for the Rest of 2015
- 8 Credit Card Myths: Busted!
- Will Credit Card Rewards Ruin Your Credit?
I find it strange that people that have this response. Do they really think everyone out there is actually paying interest on their cards?
They must!
“Pay your credit card in-full and on time. Every. Single. Month.” <– This is the ONLY way I think it's okay to use a credit card. Otherwise, it's just not worth it! That's why I can't have one – I like to shop and don't want to risk getting myself into trouble. 🙂
I hear ya. Sounds like a smart choice!
Years ago we used to carry balances on our credit cards, but thankfully we woke up one day and realized that was stupid. Now we are much more savvy credit card users, using credit cards for the rewards and paying them off every month. I’m sure we didn’t earn as many rewards as you did last year, but I’d be willing to bet we earned at least $2-3k worth of credit card rewards last year.
Yay! Go you!
Great and simple advice! I’ve never paid interest on a credit card and never hope to in the future.
Good for you!
I don’t think credit cards are a scheme…I think they are a business (and I really have no problem with that). A credit card company wouldn’t offer them out of the goodness of their heart. They are trying to (and know) they will make money with that payment option. It’s the consumer’s decision whether or not they will allow the cc company to make money from them. Like you said, pay it off on time and you won’t be contributing to their bottom line.
Exactly. You have the power to avoid paying interest and going into debt.
I don’t now but I have in the past, but that was completely my doing, not anyone else’s. Now I love to take advantage of credit card offers!
Me too =)
I could not agree more Holly. We don’t pay interest, of course, though I did years and years ago. We just finished planning three trips for us for this year over the course of the past week or two and getting ready to plan more for next year and all of that will either be free or pennies on the dollar. That’s also not to mention the different benefits you mentioned like car rental coverage and the like we get access to if we end up needing it. I have no problem taking advantage of what they’ll give to me for the spending I’d be doing anyway. 🙂
Me neither, really. I feel guilty about all of the rewards sometimes, but not bad enough to stop taking advantage of them. I also have a mortgage with Chase and use that to rationalize some of it. At least I am paying Chase some interest!
I can’t believe someone told you to go lick a banker’s boot… ha!
If anyone knows the benefit of having credit cards, paying them off every month, and reaping the rewards, it’s you!
Yep, pretty much.
That’s what we do. Use them for convenience. Reap the rewards, although not in the realm of your rewards, and pay off the balance every. single. month. in full. No deviation is allowed. And ignore the trolls. Shoot I’ve seen people go onto a Duchess Kate Middleton fan site and write horrible things about her just to be mean. (Yes, that’ my guilty pleasure admission….forgive me for the trivial portion of my life) 😉
I think Kate Middleton is wonderful!
Great article! At the end of the day, it is still us who is responsible for ourselves.
That was my first thought when I read the title, pay in full each month. That’s what we plan on doing to get the most out of rewards. We racked up $48 over Christmas. 🙂
It’s really sad how close-minded and hostile some people are. For a lot of people credit cards might be a scam because they can’t control their spending, but that doesn’t mean everyone with a credit card is a sucker. Educate yourself on issues – learn how some people use credit cards to their benefit. And if it doesn’t work for you, then admit that hey, this isn’t my cup of tea. There is no point telling someone to “lick a bankers boot”. What does that solve?
I used to pay interest in spades, but it wasn’t a scam or trickery by the credit cards. It was my stupidity and need for instant gratification. Anyone who says they didn’t know credit cards charged interest is lying or really naive.
Now, I let credit cards pay money back to me. I will never pay interest again. I don’t like annual fees either, but if it’s worth the reward, I’ll take it.
I’ve met far too many people who believe that you pay interest on your credit card no matter what. I even had someone ask me one time how much in credit card interest I was paying just for rewards. LOL that’s not how credit cards work if you use them correctly.
There are lots of myths out there regarding credit cards. So I think that’s what makes people so nervous or outraged about using them. For myself, I love using them because I hate carrying cash around that can easily be stolen and gone forever. Just pay them off in full at the end of the month and you are good to go.
Due to frequent moving (5X in 5 years), my husband and I closed down all our credit accounts and kept only our bank credit cards for booking flights/renting cars/renting U-Hauls (the rewards are just not worth the hassle these days since we really travel very little).
Anyhow, I never changed my bank credit card from my maiden name, so on our most recent visit to my parents (across the country), when I went to attempt to rent our car, they would not accept my card. My husband whipped out his card… expired (he had gotten one in the mail and forgot to activate it or put it in his wallet). We had to call my mom to have her meet us at the rental lot, pay with her credit card, and add us as extra drivers (and she wouldn’t let us pay her back) 🙁
The moral of the story… The only way to reap credit card rewards/perks without paying interest is to pay them off in full each month, and to keep them up to date with your current information.
We’ve used credit cards for reward points and I think this is fine if you’ve never paid interest. If you’re the type to spend too much with a credit card or just forget to pay it, credit cards and their enticing reward programs and probably not for you. Because who wants to pay for someone else’s plane ticket? Not me!
While I don’t use credit cards (one major point being we don’t get half of the reward offers our friends south of the border do) I think it’s amazing what people can do (such as yourself). People don’t have a sweet clue how to properly use credit cards. It’s a huge reason why we don’t truthfully. I manage cash very well and we’re not yet comfortable using credit because well, until we’re debt free I’m too tempted to put stuff we can’t afford on one. While we can afford the $30 book, it’s easy for me to throw it on the card and keep our limited funds in the bank..and so we choose to not use a card for now 🙂
People are stupid. They don’t know how to use cash, how can we expect them to know how to manage invisible money that’s ”free…..”?
I’m amazed at how easily we blame the banks and “big business” for our own irresponsibility. Yes they have high interest rates, and yes they come after you if you don’t pay back their money, but no one’s forcing you to take their credit.
That’s the rule I follow! I won’t charge anything to my card I can’t pay off immediately, basically. Unfortunately, I have paid interest before, because I followed my mom’s advice on leaving a small balance on my card each month. Thankfully I realized that was a myth early on, and I still never charged more than I could afford.
Between my wife and I, we’ve had over 50 credit cards since we’ve been married, and somehow, I don’t think we’ve ever been late, so I know it’s possible.
I *love* my credit card (yes, only one), I regularly cash in my rewards points and to me, that’s tax free money, in my hands, no work needed. Everything goes on the credit card, even parking! I also have a line of credit mortgage so my income sits in there until the credit card needs to be paid, at which time it gets paid in full.
I have, however, chosen not to accept increases in the credit limit. With the limit I have, I cannot overspend.
The other great thing about using a credit card for everything is you get a statement at the end of the month that shows ALL your spending. Balancing the books is a breeze.
I love credit cards and when you use them responsibly, you don’t ever have to pay fees, even annual membership fees because credit card companies like responsible users and will waive those fees for you. Yes, there are plenty of people who got in trouble with credit cards, but it’s not the card’s fault, it’s the user’s fault.
Not gonna lie, with this title, I really wanted you to have some annoying animated gifs like those that constantly come up in google ads. “One simple trick to lose weight!” “Dermatologists don’t want you to know this one simple trick!”
=)
I use credit cards exclusively to earn rewards and I definitely make sure that we pay the amount in full every month. People really should treat their credit cards like a debit card, charge things on the card only when you have enough money in the bank account.
We haven’t paid interest on our credit cards in over 4 years and actually just this month, we saved $1K on our most recent vacation thanks to credit card rewards
The only time we pay interest on our credit card is when we don’t push the third “ya, I’m sure I want to pay this bill” button. We haven’t done as well as you with the rewards, but the insurance gives us piece of mind and we are accumulating travel points. Everything goes on the card and we pay it off each month.
I currently have 4 different credit cards and each serves a purpose e.g. travel rewards/insurance, no fee foreign exchange card etc. Of course I pay off all my bills in full and on time so yes I agree, the credit card providers are technically paying me =D
I have been using credit cards for travel hacking this year and the only issue I have is that all the travel reward ones have an annual fee after the first year.
If I get a $400 flight but have to pay $100 annual fee, the savings is still there.
Help me figure this out. Are there any rewards cards with no annual fee?
Thanks.
Close them before the annual fee hits! Your credit score will lose a few points each time you do, but it will bounce back after a few months. I generally close cards before the one-year mark.
I’m dumbfounded at how some people just don’t understand this concept. Paying interest is not a requirement of holding a credit card. We also find it as an excellent way to manage cash flow. In our attempts to invest every cent possible, we let our main checking account drop down pretty low. By putting all of our purchases on a credit card, we can rearrange funds from other accounts if necessary without worry about overdrafting. We obviously don’t over-spend – only buy what you can afford. It requires discipline and attention, but WELL worth it!
I have done exactly as you detail for over 15 years and have not paid a penny in interest. I only buy what I can payoff each month and they pay me to do it. I can see how someone without having a solid spending discipline could loose track and charge more than can be paid off each month. The key is if you can’t take full control of your spending then you shouldn’t use credit cards. Otherwise its easy pickings to make money off of the credit card companies buying what you would buy anyway. Its a shame that I make more in rewards % than I do with my savings account interest.
I continue to struggle to pay off my credit card every month! It seems to be an ongoing problem!
I’ve found that the travel rewards etc that are offered to US credit card holders are amazing in comparison to the ones offered here in Australia. The best we get are free balance transfers and basic rewards programs!
Wow, I especially liked the reply where the person said to go lick a banker’s boot. Haha! I always tell people to make sure they set up a system that works for them. If someone has always struggled with buying more than should on a credit card and can’t pay it off at the end of the month, then that person probably shouldn’t be putting expenses on a credit card. But if someone can manage their cash flow just fine with credit cards, debit cards, cash, or bitcoin, then why shouldn’t they use the credit cards that give them rewards?
I use no-fee credit cards and I pay the balance in full each month, then reap the rewards. I think those who get upset about credit cards often have had bad experiences with carrying debt themselves (or someone they know) and don’t see it can be any other way. Credit cards may not be for everyone, but there’s no reason they can’t be used responsibly.
We have no credit cards so the problem is solved!