Using credit card reward programs...

[ScrimpAndSave]

I was carrying a little bit of debt on a credit card...and realized it was stupid since I have $15,000 just chilling in the bank. So - I took $2,000 and paid off the card. I will be able to place that amount back into the savings account at the end of the month...no biggie.

I have a Bank of America Visa card that has "worldpoints" that you can earn with purchases. Every Christmas, I have enough points to earn a $100 Visa gift card...and I use this gift card to help with some Christmas shopping.

Well, I think I really want to start taking advantage of this and use the card and PAY IT OFF monthly so I am not carrying a balance. If I set my limit as $100 a month for this card, then I can easily pay off my balance and accrue more reward points...

[MoneyTrev]

What are you asking?

My parents use reward programs for stores and on their cards. It has worked out fine for them.

[Fizgig]

I started using my American Express for daily purchases about a year ago, also to get the reward points. Beware! I'm not much of a spender in general, and even MY spending went up about 20%!!! Those cards are very seductive and I eventually realized that it was a losing deal for me. So what if I get $200-300 a year in bonuses if I'm spending an extra $200/month.

A few months ago I decided to go back to a weekly cash allowance, and it's much much better for me. You're much more likely to pass up a frivolous purchase, or that extra cocktail at happy hour if you're pulling cash out of your wallet instead of plastic.

A compromise that I've settled on is to put my utilities and regular bills on the card (phone, internet, gym, electricity). That way I get points, albeit more slowly, without the bizarre psychology of it affecting my daily purchases.

[fruitbowlk]

I have a reward program with Wachovia with my debit card.

[disneysteve]

Originally Posted by Fizgig

I started using my American Express for daily purchases about a year ago, also to get the reward points. Beware! I'm not much of a spender in general, and even MY spending went up about 20%!!!

A compromise that I've settled on is to put my utilities and regular bills on the card (phone, internet, gym, electricity). That way I get points, albeit more slowly, without the bizarre psychology of it affecting my daily purchases.

Why did your spending go up? What did you start buying that you weren't already buying? And why? I never quite understand when articles suggest that people spend more with a CC. I don't decide what to buy based on how I plan to pay.

I totally agree with charging regular bills that you'd be paying anyway. We charge our landline and cell phones, internet, auto insurance, gas, groceries, newspaper and magazine subscriptions, travel costs (hotel, airlines, rental cars, etc.), and more.

We earned about $900 in rewards last year. I will be adding up this year's charges and rewards shortly. I'll post a blog entry when I do.

[Ima saver]

I have earned $650 in cash so far this year with my rewards card. My husband charges all his building material at Home Depot and I charge our meals out. We pay it off every month but never spend more than we would have without a card.

[ScrimpAndSave]

I guess that is why there needs to be a set amount that you KNOW you can pay off...and then you won't be using the credit card for other reasons.

If I end up doing this...using my credit card for all of my regular purchases, I will transfer $50 a paycheck to the credit card to pay it off (I get paid every other week), and then the rest of my cash will go into my ING savings account.

I think it is all about accountability.

[maat55]

I started in Aug. with my Countrywide Visa, it pays 2% towards my mortgage. So far, I have earned a little over 300.00. I only use my card for some utilities, groceries, business supplies and equipment, auto gas, cable, telephone. Not for clothing, eating out or other consumer purchases.

[disneysteve]

Stay aware of any special offers your credit card company runs. For example, Discover has a different set of 5% cashback bonus categories every 3 months. Right now, it is groceries and restaurants, so we've been using our Discover card for those purchases the past 3 months and have gotten a nice amount back. Our Marriott Visa always pays double reward points on restaurants, so normally that's the one we use when we dine out.

[Ryan_Taylor]

Cash back is your best option for sure. If you sign up for airline rewards, for example, your also playing on the airlines terms. They could decide to not accept those at any time.

[ScrimpAndSave]

I wish mine offered cash back...mine gives gift cards (I always get the visa ones so I can sort of use them as cash)...and other tangable gifts.

[MiikeB]

I am glad you realized carrying a balance was stupid and decided to pay off the card.

I think you were so wrapped up in wanting to meet your savings goal, and had expenses that got in the way of that goal and you decided to carry a balance so you could still meet your goal. This is never a good idea and is counterproductive unless your cards rate is lower than INGs interest rate (unlikely).

[Fizgig]

Originally Posted by disneysteve

Why did your spending go up? What did you start buying that you weren't already buying? And why? I never quite understand when articles suggest that people spend more with a CC. I don't decide what to buy based on how I plan to pay.

Here's an example of CC expense creep, which played out over and over for me. I'm having dinner with friends. I get a reasonable $12 entree or something and a glass of wine. When paying with Amex, I'd get a second glass, and maybe an appetizer. On a cash system, if I only had $50 left for the week and still had to do some grocery shopping, I'd have stopped at the first glass, and spend a good 30% less.

Another example - I need a new pair of shoes. With a CC, I'd probably get a few pairs of socks, too, and maybe an extra pair of shoes on clearance.

I never bought anything I wouldn't have bought with cash, but on CCs I'd just get a little bit more of everything. Having cash in my wallet keeps me more aware of my budget and goals.

My guess is that the majority of people will have expense creep when they use a card for everything. Cash is a finite tangible thing. Swiping a card dips into this vast imaginary well.

[Goldy1]

I don't buy anything I would not buy with cash, and pay off at end of the month. I think I would eat dirt before going into CC debt based on non need items. Also I do not like to carry a lot of cash in my purse often b/c what if I lose the purse? It can happen. I used to just get cash back years ago but now my cards are part of some thank you network where I use the cc, each dollar gets points, and so many points buys gift cards. It's not as good as it used to be yrs ago. I usually chose a restaurant to eat out at with the gift card.
WE have a driver's edge card thay is so complicted in it's points being rewarded back ,but my DH handles that one. It is VERY complicated. ie he saves recepits to mail to them on stuff he had done on the car ie oil change and the cc pays for it based on how many points the car earned. Personally I value my time too much to do all that crap.

[disneysteve]

Originally Posted by Fizgig

Here's an example of CC expense creep, which played out over and over for me. I'm having dinner with friends. I get a reasonable $12 entree or something and a glass of wine. When paying with Amex, I'd get a second glass, and maybe an appetizer.

Another example - I need a new pair of shoes. With a CC, I'd probably get a few pairs of socks, too, and maybe an extra pair of shoes on clearance.

Interesting. Thanks for the reply. That just isn't something we do. Everyone is different. I'm not a recreational shopper. If I go to the store for a pair of shoes, I buy a pair of shoes. And when dining out, I'm always comparing options and trying to pick the least costly option, figuring out what we can share to reduce the bill, etc. And I always pay with a CC to get reward points. The CC has absolutely no influence on what I buy or order.

[jenn_1022]

I also have BOA worldpoints card. I charge everything I possibly can and ensure to pay it off right before the due date so I wont receive finance charges . I encouraged my Mom to get one as well. She charged things, never payed it off, and then complained about how the card was too difficult to handle. I guess it is all about discipline.

I found it much easier to keep track of the charges by transferring the money I put on the credit card immediately from my checking account. There are times my credit card account has money in it because it can take several days to post. If I wait the several days for it to post, I might forget to actually transfer the money and then get all confused. But that's just me...

Also, I went to order the Visa card that I usually get after the 13,500 points and I found an option to transfer points into cash. 10,000 points earns a check for $80.00 and 15,000 points earns $120.00. Hope that helps!

[Joan.of.the.Arch]

Originally Posted by disneysteve

Interesting. Thanks for the reply. That just isn't something we do. Everyone is different. I'm not a recreational shopper. If I go to the store for a pair of shoes, I buy a pair of shoes. And when dining out, I'm always comparing options and trying to pick the least costly option, figuring out what we can share to reduce the bill, etc. And I always pay with a CC to get reward points. The CC has absolutely no influence on what I buy or order.

I, too, strongly maintain that CCs do not lead me to spend anymore than does carrying cash. I am fanatically deliberate and disciplined with my purchases. This is not to say I am not a recreational shopper, as I am. But I am not a recreational buyer. I recreationally window shop: observe, evaluate, compare, appreciate. "Shopping" can be like going to a museum. I view, but do not buy. It is pleasant to see what is out there, but I surely don't feel like I need to own much of what I actually do like very much. But disneysteve, I do believe the research and the informal storytelling here in these forums that reveals that most people do increase spending when using CCs instead of cash. Anyone who suspects they spend more using CCs probably should address the problem in whatever way works best for them. Purchase according to a strict budget while still using CCs, purchase only what you have determined to buy before going out, set aside the CC and use only cash---whatever works.

[moneybags]

Originally Posted by disneysteve

Stay aware of any special offers your credit card company runs. For example, Discover has a different set of 5% cashback bonus categories every 3 months. Right now, it is groceries and restaurants, so we've been using our Discover card for those purchases the past 3 months and have gotten a nice amount back. Our Marriott Visa always pays double reward points on restaurants, so normally that's the one we use when we dine out.

And don't forget to shop through Discover. Similar to Ebates, Upromise, etc., you can get extra cash back using your card (5-20%) & going through Discover's website. The stores are limited, but I find the rewards greater than the other sites.

[disneysteve]

Originally Posted by Joan.of.the.Arch

I do believe the research and the informal storytelling here in these forums that reveals that most people do increase spending when using CCs instead of cash. Anyone who suspects they spend more using CCs probably should address the problem in whatever way works best for them.

I totally agree. If a CC makes you spend more, get rid of the CC.

[sakigt]

I dont really use my credit cards for rewards on purpose but I do have some recurring bills billed to my Discover card and it usually adds up quickly!

My wedding reception venue wouldnt take my personal check to cover the cost of the reception....they wanted a credit card.

Well 1% cash back + getting a gift card valued for more than the cash back I turn in = Lotsa Sephora goodies for free