Responsible use of credit cards
Reward programs
There are a lot of credit cards with rewards programs. Although I opted out of mail solicitations like those, my Mother gets those great offers every week. Some of them build points to redeem in their prize catalog; others give miles to redeem with airlines. If you need the items in the prize catalog or were going to travel anyway, then maybe those rewards can save you some money.
Go for cash back
The reward plans I like offer cash back. I have the “True 2% Cash Back” program from HSBC. I also have a DiscoverCard that pays mostly 1% rewards, but only ½% on warehouse club purchases (sorry SamsClub), and then they run quarterly specials that pay 5% for certain types of purchases, but with a cap on earnings. I use the DiscoverCard for whatever promotion they are running 5% for right now, and then redeem those for their upgrade gift cards ($25 only costs $20, etc…) from merchants I normally shop with anyway. We eat out a lot, and Discover pays for some of that for me. For my other purchases, I use the HSBC card and they mail me a check every month. I like cash back rewards. I also pay off those balances every month, but that hasn’t always been the case.
Pay them off
It is very tempting to use these cards for your purchases in order to maximize those rewards, whether you can pay it off right away or not. That is how you can get into trouble. As long as you only buy things you have the money for and were going to buy anyway, and you pay off those balances every month so you don’t incur finance charges that would quickly be more than your cash back rewards, then using the credit card makes sense. Otherwise, the balances climb and it becomes more difficult to get off that treadmill the farther and faster you go.
Credit deadbeats
The credit card industry refers to customers like me as “deadbeats.” Not because we don’t pay our bills, but because we do. They don’t get to collect interest and fees from us. We use them and we are not profitable for them. They don’t like that, but they have the perverse hope that someday we will miss a payment, incur charges, fees, and start on the treadmill. I get a perverse joy out of disappointing them every month. I particularly enjoy scheduling payments online to occur on the last possible day to keep me current. Take that you finance company!
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