When your credit card puts money in your pocket

Several years ago I realized that carrying a balance on my credit cards was detrimental to my financial health.   Over the course of two years I paid off over $20,000 in credit card and auto loan debt.  Since then I have not carried a balance on a credit card.  I cut up most of those credit cards believing that cash was the only way to go.   I worked out a budget and a spending/savings plan and attempted to make the transition to a cash only lifestyle.  This didn’t work out so well for me.  You see, if I have money in my wallet, I’ll spend it.  It’s a mind game for me, if I don’t see it, I don’t have it to spend, simple as that.  So in order for me to stick to a budget I needed a credit card because I knew that I had to pay it off each month and I could be disciplined enough to not go over my set spending limit.  If you are the opposite of me, and are more disciplined using cash, then please do not attempt this.

My favorite credit card is Blue from American Express.  There are many cash rewards out there, go to a site such as bankrate.com to find one that has reward levels suited to your spending.  Look for a card that has no annual fee and gives a percentage of cash back for all purchases.  Some cards require that you register for that quarters’ deals.  I tried one of those and invariably would forget to re-register each quarter.

We use this card for all of our budgeted monthly purchases and pay the balance in full each month.  Our electric, water, cell phone and television services are all automatically billed to this card.  We use it at the grocery store, gas station, pharmacy and even put Doctor and Veterinarian visits on it. The important thing to remember is if it’s not in the budget, it doesn’t go on the card.

By using the credit card in this way we have been able to redeem cash rewards which we can apply to our current savings goals.

 

If you want to be rewarded remember these three points:

1.        Get a card with NO ANNUAL FEE

2.       Use the card ONLY FOR BUDGETED PURCHASES

3.       Pay in full each month, NEVER CARRY A BALANCE