Cory Burell

While in conversation this morning a coworker of mine expressed his hatred of credit cards. He claimed that they were traps that were ruining America. Personally I think that atleast 50% of Americans should not have one but then again I think the same percentage should be castrated and put out to pasture. Needless to say for the savy spender credit cards are a tool that can be an investment.

You pay your bills every month, buy your groceries, and purchase your goodies with the same means every month. Those methods are with money. Where that money comes from is a channel that can build you further rewards. Another conversation earlier this week was on the rewards programs associated with credit cards. Some people like miles, some like points, and some like me take spending to an all new level of OCD. My wallet has come to resemble a mall map but I’m ok with all of this.

Some people instantly pull out their debit card to pay for all of these every day items for fear of fees, interest, and poor planning on their parts and I want to tell you guys to stop all of that nonsense. These companies make hundreds of millions of dollars a year off of stupidity but you can be the person taking that money back. Now while I do use a debit card 12 times a month it serves a purpose. Through my credit union I get 2.5% apr on my current balance if I use my card this number of times. To me I’ll buy 12 sticks of gum a month to get these rewards but overall spending is left to the other cards. By the way if anyone wants a high quality checking account I suggest Coastal Federal Credit Unions “go green checking”. Use that card 12x a month and your entire account gets 2.5%. That adds up fast people!

Now back to subject. You head into the grocery store. Well this month Discover is running 5% cash back on your first 400 in purchases at grocery stores and home improvement stores. While this changes monthly you can aim your spending based on their specials. To add that up if you spent $400 at the grocery store this month. Multiply this by the year and you have stacked up around 250 bucks in rewards just at the grocery store/etc. Obviously this isn’t going to cover your other purchases but just on that item you saved $250. Now lets take your rent, utilities, etc.

Common household (estimates obviously)

rent:$900

utilities:$100

cable:$100

insurance:$100

You’ve now pulled that precious checkbook or debit card for $1200 dollars this month with no payback! No one has given a portion of that back to you…….no one has said thank you for your dedication to our bank. Basically you threw that money away.

Now lets take an average 1%-2% rewards scenario!

rent:$900 @ 2% rewards= $18

utilities:$100 @2%=$2

cable:$100@2%=$2

insurance:$100@2%= $2

So so far you’ve accumulated 20 at the grocery store and 24 just paying your normal bills. Thats 44 dollars a month back into your pocket not including the 5% you could have saved at best buy, etc by just using their cards. Take a modest 50 dollars a month and multiply that out by 12. Now you are looking at $600 dollars saved this year by spending intelligently on top of the 2.5% you gained at the bank through green checking. Now you are taking that 600 dollars a year, putting it back into your checking account that you are making 2.5% on!

All of this may sound a little OCD. I mean now you have cards coming out the wazoo, thoughts about which to use, etc but believe me it is fairly easy to get used to.

So lets say at the beginning of the year you had $10k in the bank, you use these methods, and put the money in a “go green” account versus just having a checking account and using debit.

Using logic:

Starting balance:$10,000

Savings, $600

End balance: $10,600

Interest: $265

Total=$10,865.00!

Now I don’t know about everyone but I like having that extra money. Thats a vacation, a new sofa, or almost a free months rent. The key is to pay your credit cards before interest kicks in and to pay in full! Don’t leave a balance of your cards people! They are free to use……..but costly to abuse. While that might sound scary its no more frightening that writing a check. If you overspend on a checking account its $32 bucks a pop for every boo boo. At a 9.9%apr card you would have to rack a good little balance to add up to that.

Just think about it people and use strategy in your spending. It’s your money and you worked hard for it so why not work hard to keep it?

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