Why and how we use credit cards will greatly influence our capacity to save money and accumulate wealth over time. What I am proposing is that credit cards can be used as a tool that can help you augment your savings.
This might be counter intuitive because I am talking about using a credit card to build your savings. The idea here is not to go out and use your credit card as much as possible. On the contrary, you should limit your credit card use to amounts you know you can pay back on the short term. However, if you are going to be using your credit card and if you are going to be spending money anyways (and lets face it, you do need to spend money if only to gas up and eat), DO use a cash back or points cards to maximize your return. When you accumulate a certain amount of money, use that cash and put it directly into your savings!
Points credit cards
Points credit cards all work differently but have the same guiding principal: spend using our credit card and we reward you with points that you can redeem at a later date. The points can sometimes be used at various stores or to buy gifts from their online selection like airmiles for example. Others are more specialized and will offer only air travel points that you can use for future plane ticket purchases. There are other credit cards that will be very specific as to where you can redeem you accumulated rewards, for example de Scotia bank credit card that allows you to get movie tickets.
Before getting a points credit card, make sure you are truly interested in the payout!
Cash back credit cards
Cashback credit cards have a straightforward concept: spending money using our credit card will earn you money. They give you back a certain percentage of what you spent. For example, one credit card might offer a 2% cashback on all purchases. For a 200$ purchase, you will get 4$ back.
If you know how to use them to your advantage, points or cash back credit cards can make a difference to your wallet. Take the time to compare the different cards available to you might make you little bit richer than you were last year!