Use Credit Cards to Buy Free Holiday Gifts

With the crazy interest rates associated with credit cards today (15% to 30%) why would someone use their credit card to purchase everything? Good question, but the real question should be why did you get a credit card in the first place and how did you plan to use it?

How the Banks What You to Use Your Credit Cards

The bank/credit card lenders want us to use our credit cards to make as much purchases as possible so that they can make money both on transactions and interest charges.  The credit card companies make money from the fees they charge retailers to process credit cards. However, that’s just the first half of how they make their money.  They also make an insane amount of money from charging interest and annual fees to us poor consumers that do not know any better or are unfortunate enough to be in a position where we have to depend on using a credit card to squeeze by.

 

Are you getting paid to use your credit card?

So if the credit card companies make so much money off transaction fees and interest why do I purposely use my credit card to purchase almost everything?

 

The answer is simple I actually get paid to use my credit card.

 

How do I get paid you ask?

 

Well it’s simply every time I use my credit card I get at least 1% cash back on whatever I spend.  The real purpose of credit cards should be for extreme emergencies and everyday purchases you must do (i.e buying groceries, gas, a $1 bottle of water, coffee, lunch…..).

Do not confuse everyday purchase with “willy nilly spending.” You should only use your credit card for things you were planning on purchasing with cash.

 

EXAMPLE: hmmm it’s hot out.. I am going to buy a bottle of water for $1.00.  Well since you have the $1.00 cash in your pocket you might as well use your credit card and receive at least 1% cash back.

I know this seems extreme but imagine if you did this for all purchase you NEED to make every month (food, gas,…).  This would add up and at the end of the year you would have enough money to purchase Christmas gifts or pay for a plane ticket back home to see the family.

 

 

There Has To Be a Catch It Can’t Be That Simple!!!

You sir/ma’am are smarter than the average bear.  Yes there are multiple catches; but, if you use common sense and follow a few credit card tips you will not have to worry about the hidden fees or special tricks credit card companies play to take away your hard earned money.

Credit Card Tips to avoid fees and get paid to use your credit card

 

Credit Card Tip 1:

Only purchase things on your credit card when you have the actual cash sitting in your checking account to pay for it.  Basically you are learning to use a credit card instead of cash whenever possible.  Never use a credit card if you don’t have the cash to pay for the purchase the same day (except for extreme emergencies)

Credit Card Tip 2:

What is an extreme emergency? Well one would think that it could be a medical expense, car repairs, etc. However, I know that if you are reading this blog you don’t believe that because by now you have an emergency fund, a vacation fund, 2 years living expenses fund and a retirement account setup for those types of emergencies situations.  Right?

Credit Card Tip 3:

Always pay your credit card bill within the same week of using it. What, but I have until the end of the month to do that… 30 day after purchase right??? Well that all depends on the credit card company… Some are 30 day others are 25 day and some are 20 days before interest is charged on the account.  Since the money is already sitting in your checking account.. just log on to your bank from your computer or cell phone and transfer the FULL payment to the credit card weekly (takes about 30 second). This method ensure you don’t forget to pay your credit card fees and also avoid the credit card tricks of changing the date they start charging interest on remaining balance.  Also, checking and paying your balance weekly helps you to keep an eye on your account for fraudulent transactions that might pop up a month later on a billing statement. Click here to see my post on credit monitoring and the rise of cyber hacking (NEVER CARRY A BALANCE ON A CREDIT CARD FROM MONTH TO MONTH).

HOW TO FREEZE YOUR CREDIT REPORT

 

Credit Card Tip 4:

Only purchase things you need.  Don’t buy things just because you get 1% cash back.  That’s just STUPID. Remember this strategy is to replace ‘using cash’ with a credit card.

Credit Card Tip 5:

Since you never carry a balance you should call the credit card company every few months and tell them to lower you credit card interest rate.  If they say no hang up and call back in 15 mins. Eventually they will say yes if you have a decent credit score. Note: the actual credit card interest rate doesn’t matter too much as we pay off the balance before it comes due. But just in case we are stuck in a REAL emergency we are getting the lowest rate possible.

Credit Card Tip 6:

If you have to use your credit card for a REAL emergency… you should as soon as humanly able pay the card off with your emergency funds.  Then seek to replenish your emergency funds ASAP. It makes no sense to continue be charged a 25% APR when you have the money to eliminate the credit card bill.

Credit Card Tip 7:

Ensure that there are no annual fees associated with your credit card. Having an annual fee is ridiculous especially with all the credit card issuers competing for your business. For once you are in the driver’s seat and are able to choose the best credit cards with no annual fees.

Credit Card Tip 8:

Never use your credit card to purchase something when you will be charged a processing fee.  For example you need to pay your rent and the landlord says he will charge a 3% processing fee.  In that case you would not use your credit card but instead you would use a check. I would love to pay my rent with a credit card IF no processing fees would be incurred.

 

Should I Freeze My Credit Report? Does it help stop the hackers?