• Cash Back from Credit Cards

    Getting paid to shop.

    Imagine if VISA or Mastercard called you up and said 'Hey, I want to pay you to use our credit card. Every time you make a purchase I will give you money.' Essentially this is what their marketing dollars are trying to tell you. It's easy to take advantage of their offers, BUT you can only get ahead if you don't carry a balance and pay it off each month.

     

    The credit card companies have been paying me to use their products for many years. And I'm an average Joe, just like you. I do my research and find the credit card that will provide me with the most Cash Back based on their offerings and my spending habits. As per their terms and conditions, the credit card companies change their programs as they see fit. If a program no longer works for me then I cancel the card and move my business to another card. As an example, I used to have a card that gave me 2% Cash Back on gas and groceries and 1% on everything else. After a while, they decided that they would only offer 1% across the board. This meant that it was time for me to go back to the drawing board and do my research again. Sure enough, a better card was available and I moved my business.

     

    Here are my rules:

    1.  DON'T spend beyond your limits. You have to be able to pay off your credit card each month. You do not want to be paying 20-30% interest on the balance. I pay mine off weekly to stay on top of what's in my bank account and manage my spending.
    2. Only sign up for a card that offers Cash Back as a percentage in cash. If you deviate from this, be aware of any limitations to the points, miles, gift cards, etc. and make sure the conversion to cash is worth it.
    3. Keep 2 active credit cards - for example: one VISA and one Mastercard. Use one card as your main card and use the other as a back up with a minimal limit. I do this in case one of the cards is not accepted from a retailer, gets compromised or is faulty.
    4. Pay for as much as you can with your credit card. Take advantage of the system. This will maximize your Cash Back. However, refer to rule #1.

    Need a loan for a house, car, business? Using credit in this manner will also improve your credit score. Your credit card use might help you get approved for additional credit. Be warned that too many credit applications in a short period of time and having open credit (too many cards, lines of credit, etc.) can work against your credit score.

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