I personally have never had any credit card debt but I am sure that some of our readers have and they found out really quick that they did not like the amount of interest that piled up every month. I was planing about talking about the interest rates of credit cards, the bad ones and the “good” ones (they actually all suck). However, after thinking about it I don’t even look at those rates because I never plan on using my credit card for things I can’t afford.
This post is not for everyone if you already have a lot of credit card debt (look out for next week’s post) or your credit score is low this may not be for you. This type of saving is not for everyone because it can get you into trouble if you do not pay off the credit cards in total each month.
Now that you have read the disclaimer let’s get down to business and talk about how you can save money using credit cards. First thing first, is that when you just use cash or a debit card you are just spending your money in full (that’s what poor people do). When you use a credit card that has some type of rewards you can get points, miles or cash back. I have seen as little as 1% back and high as 5% back. So instead of spending 100% of your money, you are spending anywhere from 99% to 95% of it. Okay okay, that’s not a lot of money but if your spending that money anyway why not save the little you can and go on a vacation or buy Christmas presents. This is low hanging fruit that almost anyone can take advantage of and it doesn’t take any time.
My wife and I didn’t do anything fancy last year and still made over a $100 in cash back from our Discover cards. We did this while I was in school and we didn’t spend a lot of money. This doesn’t take any extra time. This is something I would recommend to anyone that has the discipline to pay off their credit card at the end of the month. The second you leave a balance on the card the interest starts to eat up your savings.
I know you are all thinking “credit card companies want me to not pay my bills so they can make money!”. False!! While it is true that they can make money when you don’t pay your bills They still make a lot of money by you paying every month and then they don’t have to worry about the risk of you not paying them back.
For those that don’t know, every time you use a credit card they charge a convenience fee. The majority of the time the company you are using the credit card at pays that fee for you. That is how they still make money. I am telling you this so you know by doing this you are not cheating the system. They are making money off you either way so why not make some money off them as well. Am I right or what? As my wife always says “You are always right Logan”. Well… Maybe that is a little exaggerated but this one is a no-brainer.
If you want to take it a step farther here is my next suggestion (This is for people who have excellent credit scores). This strategy is good for people who subscribe to Dave Ramsey and don’t care about their Credit Score because this would be the only thing you use it for.
Here is the trick use the credit card signup bonus (once again I would not recommend opening new credit cards if you are already in a lot of debt, get out of debt first before you start on this). Right now I am looking at a few cards one is the Capital One® SavorOne℠ that has a signup deal of $150 back after you spend $500 in the first 3 months and the Wells Fargo Cash Wise Via® that you get $200 when you spend $1,000 in the first 3 months. If my wife and I do this we could make $350 in the next 3 months just by spending what we normally spend!
I am not going to try and be an expert on what credit cards are the best to use. The two places that I have learned the most about how to use them better is Nerdwallet and ChooseFI. I am going to put into practice what I have learned (as I recommend for you to do). I will let you know how it goes in the next few months.
Please remember this is just a place to pass around ideas. There isn’t the right and only way to do something. Don’t take the lazy bum approach and find out if this is a good idea for you or not.
Good luck out there this week!