Credit card companies are always taking advantage of consumers but what happens when the consumer takes advantage of their credit cards? This is precisely what my husband and I did with our credit cards in 2016. We weren’t using our credit cards enough to feel like we were reaping the rewards to its fullest potential. We decided to charge everything to our cards that we could, this meant bills and all other shopping. The plan, of course, is to pay everything off within the month or else this process would be useless. If you are not careful enough with this technique, you can land yourself in some serious debt so please proceed cautiously. When you pay off the card every month, you are avoiding interest and reaping the rewards for free. Let me show you how it works.
1. Charge your credit card, only if it does not incur fees.
Certain vendors allow you to use your credit card but with processing fees. At this point, this isn’t an ideal situation to use your card because you will be paying more in fees than reaping the rewards. Example is paying your rent via credit card instead of ACH or debit but the processing fees are $25.00. Charge your cards at vendors who do not charge a fee such as the grocery store, certain bills, etc. You will reap 100% of your rewards, let the vendors pay the merchant credit card fees.
2. Pay back the amount owed each month to avoid interest.
My Capital One card’s current reward is 1.5% cash back on all purchases. However, my interest rate is 24.99%! See the difference if I do not pay off the card each month? The whole point of this process is to reap rewards and not pay a cent in interest. I’ve done it for the past 4 years so it’s definitely doable!
3. Use your rewards wisely.
Depending on what rewards your card offers, it’s easy to just get a gift card to Amazon or another vendor but if you are carrying a balance on your card, it is best to use your rewards to pay off your remaining balance instead. Hear me out, yes it’s your rewards and you decide ultimately how to use and spend them but why not pay your balance down so you can have more financial freedom while than buy more stuff? Wasn’t that what got us in this credit card debt mess in the first place? Once your balance is zero, your rewards are completely FREE for you to use at that time.
The most important step of this is to track your expenses on your card because if you do not, this could end up worse than where you started. The whole purpose of this is to use your credit card to your advantage. If you do not stay on top of it, you will end up in more debt so please proceed cautiously. If you have any questions, please feel free to reach out to me. Best wishes to you all!
Sincerely,
Melissa Lee