How credit cards can help everyday households stretch their budgets

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At TPG, many readers know credit cards as a way to make travel better, whether that means sampling a new lie-flat seat or spending time in an airport lounge. For travelers, these cards can open the door to memorable experiences.

For many American households, though, credit cards can do something even more practical: help ease pressure on the family budget as prices rise and unexpected expenses appear.

Recently, TPG founder Brian Kelly spoke with three ordinary families about how they use rewards to get more value from their money, and those conversations highlighted how powerful the right card strategy can be.

Here are a few examples of what credit cards can help unlock in everyday life.

Helping kids build financial knowledge

One overlooked advantage of credit cards is their ability to teach financial habits and help prepare children for adulthood. This does not mean handing teens or young adults unrestricted access to a large credit line. Instead, it can mean adding them as an authorized user on an existing account.

That was the advice given to Seungah Jeong for her 14-year-old daughter, Emi. Now in high school and beginning to spend her own money, Emi can start establishing a credit history through her mother’s card before eventually setting out on her own.

Some cards also let account holders set spending limits for authorized users, which can give children a safe way to learn budgeting.

Getting rewards from the right spending

Credit card users have different goals, and getting the most from daily spending starts with two basic questions:

• Where do you spend the most money?
• How do you want to use your rewards?

If you rarely dine out, a card that rewards restaurant spending will not be very useful. If you travel internationally often, you probably want to avoid foreign transaction fees. And if you focus too narrowly on one travel brand, you may miss out on more flexible options.

That was true for the families TPG met.

Andrew and Tracy Goralczenko, parents of quadruplets preparing for college, were laid off two years ago after the company they worked for shut down. They had long earned rewards with a theme park card, but that no longer fits their current situation.

For them, a cash-back card makes more sense, especially one that pays 3% back on major expenses such as gas and groceries.

Seungah’s family faced a different need. Her 18-year-old son Oliver was preparing to study in Greece, so the recommendation was a travel rewards card with flexible redemptions and no foreign transaction fees. That way, he would not pay up to 3% extra each time he used the card in Europe.

Renee Lewis-Mance and her husband, Chris, are retired, but she has remained deeply focused on points tied to one airline and one hotel program. Those programs can still be valuable, but retirement also offers something else: flexibility.

For that reason, the recommendation was to add a transferable rewards card, which can provide more ways to redeem points or miles when planning a trip. That approach avoids locking her into a single airline or hotel chain.

In addition to earning on everyday purchases, many popular cards also offer welcome bonuses for new applicants, although minimum spending requirements usually apply. That can mean collecting a large batch of points, miles or cash back right away while switching to a card that better matches your habits.

That was especially attractive for the Goralczenkos. The suggested card offered a $100 welcome bonus and 3% back on select everyday categories, which may not cover a trip to Europe but is far more useful for their current needs.

Chris Mance found a similar advantage. He was able to earn a one-time $200 cash-back bonus from a new card that also fits his monthly spending better.

Just as important, that card could help with another strategy.

Cutting down on cash use

At TPG, there is a running joke that there is no real point to using cash for everyday purchases, though there is certainly risk in carrying it. Cash can be lost or stolen, and debit cards typically do not earn rewards.

That was the case for Chris Mance. While Renee enjoys collecting points, Chris usually pays with cash or debit for routine trips to Home Depot and the grocery store. By moving those purchases to a cash-back credit card, he can earn meaningful rewards instead.

Based on estimates, his grocery spending alone could generate about $250 in cash back each year.

He also spends a fair amount on home improvement items such as tools, gardening supplies and plants, so a card that lets him choose a 6% cash-back category in the first year could bring in roughly $300 in rewards.

Best of all, that card has no annual fee.

In both cases, Chris would not be spending more than he already planned. He would simply be using a payment method that pays him back for purchases he already makes.

The takeaway

Credit cards come in many forms, and there is likely a good fit for nearly every American. Some are designed for luxury travelers who want premium perks, while others are better suited for everyday needs such as grocery shopping or helping a child build credit.

Everyday families can use cash-back rewards to strengthen their household finances, and they can improve results by examining their spending patterns and choosing the cards that match their lives.

As long as credit is handled responsibly and spending stays within budget, the only real mistake is not taking advantage of the benefits at all.