Tag Archives: credit cards

Why I Love Reward Credit Cards

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I admit, I love my reward credit cards, and I run everything through them as much as possible.

When I go to some store (like Target), I even buy a pack of $1 gum with my credit cards!  So you might be wondering why I love to own credit cards such as the American Express Blue Cash Card and the Chase Freedom cards?

Credit Cards

Credit Cards

Well basically, it’s because I like the discount that the cards gives me on all of my purchases!  Why would I want to pay with cash if it’s cheaper to pay with a credit cards via reward points?  It’s kind of ironic if you think about it.  I’m getting a discount in the form of reward points, but when I use such reward credit cards, the store that I’m using the credit cards at, pays the credit card companies extra fees.  You’d think they would do the opposite and charge less for cash and more money for the credit cards. But they don’t!

Perhaps someday they will, but until that time I’m going to continue to get my discount on items bought at such stores and vendors.

I Love Money Hacks

Another thing I love about credit cards is the potential to discover money hacks to maximize the benefit of using reward credit cards.  Often with me and others it’s a game to find a way to maximized the benefit of using the credit cards.  In my case, I only pursue legal money hacks!

An example of a common money hack today is when you have a reward credit card, and then guy gift certificates at a grocery store like Giant Eagle.  You see in this example you get a higher reward rate because you are using the card at a grocery store, but you are also getting the fuel perks from Giant Eagle to make a purchase there.  So basically you are getting a double benefit for what would cost you much more if you were paying cash for the gift certification at Giant Eagle.

If you look around for such deals, they are possible to find!  You don’t hear about them much because after a while the loophole becomes know and the store that has such a loophole closed it eventually.

Controlling Credit Cards

The thing about credit cards is that they are just a tool.  You much control the tool and not have the tool control you.  So that said, if you carry a credit card balance more than a few months, the rewards credit cards lose their advantages and you are better off going for the lowest interest rate credit cards you can find.  The reward credit cards carry a slightly higher interest rate than non-reward credit cards.

In my particular case, I don’t carry a balance, so the reward points is all true savings for me.

What do you think?  Are you a fan of reward credit cards too?  If not, then why, especially if you don’t carry a balance?

Regards,

MR

Making Your Credit Cards Work For You Instead Of Against You

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Chase Freedom Credit Card

Chase Freedom Credit Card

Making Your Credit Cards Work For YOU!

Okay, let me start by saying that I’m the master of my credit cards and they work for me not against me!

I use my credit cards for everything that I possible can!  I use them for the typical stuff (clothes, groceries, gas, etc), and even non-typical things such as fast food, taxes, car insurance and really anything that I can charge with them!  I’ve even tried to buy a new car with my rewards credit card (the dealer wouldn’t bite on that one though)!

So why do I charge so much with credit cards?  CREDIT CARD REWARD POINTS

Yes, I love credit card reward points that I get for using credit cards!  I’ve use my points to buy computers, camcorders, jewelry, clothes and other such items.  But my favorite thing to buy with reward points (other than getting cash back) is gift cards.

I’ve found that if you buy $100 denominations of gift cards, you get a better point to value ratio!  So I almost always go for these types of rewards today.

The trick with reward credit cards is that you must pay your balance in full each and every month.  If you don’t do this, it greatly diminishes the benefits of the reward points provided by such credit cards because the interest on carrying a balance on such cards is usually much higher than the bargain non-reward credit cards.  So please don’t use reward cards if historically you have carried a balance!

Present Day Purchases

My last three purchase (from oldest to newest) has been Nintendo DS, Sony Camcorder and a ASUS Computer (it was only $700!).

Although I’ve bought TVs in the past, I’m going to buy a LED or LCD Big Screen TVs and then take a different direction with future purchases using reward points from my reward credit cards.

 

Future Plan Purchases

I’ve come up with what I think is a clever solution to take some of the bite out of minor, future emergencies, at least to some degree.

My house is over 10 years old now, and this means that my some of my appliances are starting to get pretty old too.  So lately, I’ve thinking about letting my balance ride until my dishwasher, clothes washer or dryer, or any appliance start to fail, at that point I’ll redeem my points and buy a new appliance with the reward points.  The only caveat is that I’ll have to cash out some of the point every 5 years or so.  Some of the credit card companies have the points start to expire around this time period.  You really should check your policy to determine when the points start to expire.  Another option would be to call credit card company’s customer service 1-800 number and ask them if and when the points start to expire.

As an alternative, I’m also thinking about getting reward cards such as Chase Freedom that will give you cash back instead.  That way I can create a special emergency fund this way.  Actually I’m kind of fond of the idea of a free emergency fund (lol).

The key is to have total control of your spending!  I only spend on what I normally would spend money on, nothing more and nothing less.

Do your credit cards work for you, or you for them?

MR

 

 

 

Credit Cards Cannot Be Used To Buy Certain Things!

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In the article on the Smartmoney.com website called: What Your Credit Card Won’t Let You Buy, the article makes the following statement:

To the surprise of consumers, major credit card companies are making decisions about what they can and can’t buy with their credit cards. What’s off-limits? Legal purchases like gambling chips and donations to at least one controversial non-profit organization; in some cases, buying p.0.rn.0.s is also restricted, and so, increasingly, is medical p.0.t.

I’ll be honest, I’m not 1005 sure how I feel about credit card companies arbitrarily deciding that they will let the consumer purchase or not.  After all, it’s has a bit of the big brother flavor that we all hate but seem to experience more and more in our lives.  That said, credit offered by credit card companies is not money or earnings gained by the credit card user, so why not?  We live in a capitalistic country so if one company doesn’t do something, usually another companies tries to compete in that niche if it is profitable.

So now that we’ve established that we really don’t have the rights to the money offered by the credit card companies, let’s use an example to make better sense of borrowing money on credit.  Let’s say you have a friend that asks you for money to help buy a car, then later you learn that he didn’t buy the car but instead went out and bought p.0.rn online.  Now a month later he comes back to you and asks for more money for a car because he needs it for work.  This time you tell him that you’ll loan him the money, but that the money must be used to buy the car.  Now what if he again goes out and buys more p0rn online?  Wouldn’t you want the money that he used to be used for the reason that you lent him the money?  Wouldn’t you want him to use the money you lent him for a beneficial use versus repeatedly being use for something addictive or that would make the chances unlikely that you would be able to collect the money that you lent?

IMHO, the bottom line is that credit card company is offering you a service.  They are not giving you money away for free and they want to make a profit on their service.  If they couldn’t be profitable, they would soon go out of business.  So since it is their business, I think they should be able to determine how the money is spent.

I guess in a world where the law says that you must wear a seat belt, I don’t really see the credit card company’s restrictions as being much of a rights violation.

The credit card argue that they are protecting themselves from the federal government coming back and punishing the credit card companies for the purchases that their clients make.  Based on the attitude of the government towards this industry, they actually may have a valid point here.

Hidden Benefits

What if the restrictions in place from certain credit card (mainly American Express), help us to curve our additions?  Perhaps such restrictions would even enabling us to preserve our financial state of well-being, in addition to making it harder to purchase our addictions?  Perhaps this is really a win-win in disguise?  However I have to wonder what is next?  Cigarettes, alcohol, firearms, certain foods?

Ways Around the Credit Card Company’s Policy.

The simplest way around this problems is to use your credit card company’s card to purchase cash.  After it is cash, they can no longer track what the money is being used for.

With so many people in the financial community complaining about credit card companies, what do you think about this relatively unknown restriction on the use of credit cards?

I’m looking forward to your comments,

MR.

 

5 Reasons To Use A Credit Card

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The following guest post is from United Kingdom writer (Les Roberts, and so a small italicized section of the following article pertains just to the UK (section 75 of the Consumer Credit Act 1974), the rest of the article applies to all.

Credit Cards

Picture by Andres Rueda on Flickr.

 

 

Many people view credit cards as the monetary equivalent of an addictive drug, once you start using them you will want to use them more and more until you have become totally dependent upon them and your life is in tatters, financially at least.

Which is one way of looking at it!

But, although there is no doubt that credit cards do send some people on a downward spiral financially, that’s not to say that there is a time and a place for credit cards and, if used correctly, they can be a great asset to personal finance planning.

So below are five good reasons to put it on plastic.

Reduce Existing Debts

Balance transfers are a great way to save money and can also help you pay off an existing balance sooner than expected.  This is because many lenders offer interest free periods to new customers and so you can transfer the balance of an existing credit card onto a new card and pay no interest for the duration of the offer.

These interest free offers generally last between nine and 18 months depending upon the lender and so great savings can be made.  In addition, any repayments you make are taken directly off the balance with no extra interest added and so, in theory, you should be able to repay the debt sooner.

Spread the Cost

If you need to make a major purchase but cannot afford to pay for it all in one go then a credit card enables you to spread the cost over a period of time.  This is a great way to manage your cash flow but you need to make sure that you have the best card available for this purpose else you may end up paying well over the odds in interest fees.

So if you are to use a credit card for this purpose then it is best to try to get one that offers zero per cent interest for as long a period as possible.  This means that any repayments that you make will be taken directly from the cost of your purchase and will not be passed on to the lender as interest payments.

If this is not an option then try to get a card with the lowest annual percentage rate (APR) available so you are paying a little out in interest as possible.

Maintain a Good Credit Score

In recent years credit companies have been a lot more selective about who they lend to, so it is imperative that you maintain a good credit score.  And using a credit card regularly is a great way to do this.

If you use your credit card for everyday purchases, such as fuel and food, and pay off the balance at the end of each month, then this will show that you are a responsible borrower and lenders will be prepared to keep on giving you credit.  But it is imperative that you keep up with your repayments as a missed payment will show up on your credit file and could have a negative impact on your score.

Similarly, using a credit card is a good way to rebuild your credit rating if you have a low score due to having never used credit before or because you have mismanaged your credit in the past.  Once again, the important thing to remember is to pay off your balance in full at the end of each month as this will ensure that you are seen as a responsible borrower and will rebuild your score more quickly.  In addition, if you pay the balance off in full at the end of each month it will mean you avoid costly APR charges on your purchases.

Earn Rewards

Many credit card companies now offer customers incentives, such as cash back or air miles, to ensure that they regularly use their particular card.  So, once again, if you use your credit card for everyday purchases and then pay off the balance in full at the end of each month then you can earn as much as five per cent cash on your purchase.  This really is money for nothing.

Alternatively, air miles may be of more value to you if you are a frequent traveler so if you use an airmiles credit card then you can benefit from discounted, or even free, flights just for spending on your credit card.

You just need to have the right cards and use them in the right way.

Protect Your Purchases

Paying with a credit card generally offers you a greater level of purchase protection than paying with cash or a debit card.

Under section 75 of the Consumer Credit Act 1974 (for United Kingdom) your lender becomes jointly liable with the seller as soon as you spend between £1,000 and £30,000 on your credit card.

This means that should any goods you purchase on your card be damaged, faulty or not be delivered to you, then you can ask your credit card provider for a refund.  Although this is something that you would normally take up with the trader, this Act simply ensures that you have another avenue to do go down should you have no joy from the seller.

So, if used correctly, there are a number of occasions when it is more beneficial to use a credit card.  But it is vital that you use your card correctly and this usually means paying off the balance in full at the end of each month.  Use your card unwisely and you could find yourself facing a mountain of debt!

Article written by Les Roberts, credit journalist at Moneysupermarket.com.

Money Reasons here, I just want to thank Les for a great article!

Update: as mentioned in the comments, using a credit card may also help you establish or improve your credit score.