Credit is a powerful thing. It can help you buy a house far beyond your immediate purchasing ability, it can keep you from getting employed, and it can influence whether or not you are charged 10% or 29% on a credit card. It is fully possible to avoid building your credit, you don’t ‘NEED’ it but it can certainly help you out.

You should always avoid going into debt unless you are using the debt to secure assets but it is also possible to use short term debt to your advantage.

There are all sorts of random perks that cards will offer up to get you to join. Whether it is GM offering you X% cash back towards a new car, Delta airline miles, Hyatt free hotel stays, or any myriad of the points programs out there. Credit card companies realize that without providing these services, the competition can clean up with free iPods or free hats. (thanks Emigrant Direct!) The downside is that credit card companies will often offer these great perks to attract customers but will hide the higher APRs they charge in the fine print. Don’t fall for their gimmicks!

Credit card perks are a little extra ‘thank you’ for using the cards, these perks should not be used as an excuse to take on additional debt or to apply for every credit card offer you receive. If you’re going to buy $200 in groceries and you have at least $200 in your checking account, you can swipe your debit card and have the $200 deducted or swipe your credit card, get the perk, and pay $200 to your credit card company. The cost of the perk is only the time it takes you to pay your bill at the end of the month.

I received a rebate of $98.09 for using my USAA credit card last year. (If you are eligible for USAA, I highly recommend it. To be eligible, you must have served in the military or be related to another individual who already has a USAA account) It provides 1% cash back on all purchases I make. I use the card for most purchases over $100 whether it is for groceries or ticket master and for most purchases that are ~$20. Since my USAA card is linked to my USAA checking/saving account, it is pretty simple to log into my account and pay off the charges as they pop up. It might not be worth the effort of other individuals but I’ll take a ‘free’ $100 any day.

I also use my American Express card to auto pay my Verizon phone bill and my USAA car insurance every month. Since I pay off the balance in full every month, all I use the card for are the points. While the rewards don’t amount to much, they were able to provide me with a $50 Barnes and Noble card during 2007. $50 worth of ‘free’ books every year was more than worth the 5 minutes it took to set up the auto pay program and the few minutes it takes every month to pay the bill in full.

As previously stated, I don’t advocate using a credit card if you can’t pay the bill off in full every month. I do advocate using your credit card, getting the best perks out there, and paying the bill off every month. The little things really do add up over time and you should be headed in the direction of accumulation and building rather than towards attrition and hole digging.