REWARDS CARD

Credit cards can be bad things or good things depending upon how one uses them. If you do use them, it is wise to pay them off monthly and not carry a balance. When you do this, you will be known as a deadbeat in the credit card industry. I used to think that deadbeats where the ones that did not pay their bills. Now if you pay off your credit card monthly and do not allow the credit card companies to earn any interest off of you, you officially become a deadbeat in their eyes.

Don’t worry about the credit card companies. They are still making money off of me. They charge the merchants 3% for every purchase I make with my credit card. So if I purchase $1,500 in a month, the credit card company makes $45. Just imagine if I carried a monthly balance of say $1,500 at 11.24%. Then their haul would be $45 for monthly purchases and $14.32 interest for a total amount of $59.32 for the month. Now multiply this by thousands of accounts and you can see why money lending is extremely lucrative. All that the credit card company did was provide for an unsecured loan. Not much sweat off of their brow, but plenty off of yours.

It does not make sense to own a credit card that does not have any benefit to it other than getting an unsecured loan. There is no incentive for me to use it. I might as well use a debit card, check, or cash. There is no difference in using a credit card that you pay off monthly and these other forms of payment. For me to use a credit card, on a regular basis, requires the credit card company to give me an incentive.

I have two credit cards. One is used for making monthly purchases and the other is used in case of emergency because it carries a fixed rate of 7.9%. The one used for monthly purchases is a reward card. I use it to make almost every one of our monthly purchases. I just got through depositing a $50 check just for the privilege of using this card. This is a better rate than I could get on $10,000 deposit in a Certificate of Deposit paying 3% (which is $25.47). Of course, I do not always get $50 a month. Most of the time, it is $25. It takes a while to accumulate $10,000 and then receive a paltry 3% a month is almost not worth it.

I have to purchase a certain brand of gasoline that pays me 5% on each purchase. I work part-time as a vendor and so I fill up the delivery truck every other week which gives me $8 in reward money a month. I receive 2% on travel and dining and 1% on all other purchases. This means that just about every monthly purchase is put on the card. These amounts add up. If you are not able to generate $25 for a month, your rewards carryover to the next month. This system works.