Do rewards credit cards have any long term impact on wealth?

[rennigade]

Wealth...no.

Savings...bigly.

Ive been pretty open about how I churn credit cards and the amount of money/gift cards/free flights I get. I used to try to explain to people how to get free flights but soon realized it was a complete waste of my time. They either have no intention of traveling or do not believe it can be done.

[rennigade]

Other than a couple of pizza shops, I don't know of any places in my area that are cash only. Cash only is never going to become the norm.

Cash only places lose my business since I never carry cash.

[StormRichards]

Cash only places lose my business since I never carry cash.

I usually carry between $10 and $20 because the convenience store I go to during work hours has a $5 minimum to use a credit card. Now that is a policy I could see becoming more common due to fees.

One of the pizza shops I mentioned can get away with being cash only (they do have a MAC machine inside the shop) because their pizza is that good. It is also one of a few pizza places that won't deliver either.

[MakeAStash]

Around here there are smaller food businesses and gas stations that are cash only. Their prices are about 5% less, which helps me save since that's more than I can earn via a rewards card for those purchases.

[Fishindude77]

I would say NO.
Using cards like this just gets you "a little better buy" on your purchases You could accomplish similar savings by just being frugal and shopping out your purchases.

[StormRichards]

Around here there are smaller food businesses and gas stations that are cash only. Their prices are about 5% less, which helps me save since that's more than I can earn via a rewards card for those purchases.

I am not a merchant, but I did a search on merchant fees to see how much they were. I couldn't find a single reference to anything as high as 5%. So with that in mind, it seems stupid to lower prices 5% and be cash only.

[disneysteve]

Around here there are smaller food businesses and gas stations that are cash only.

I'm really surprised to hear of a cash-only gas station. I wonder how many drivers pull in and have to pull right back out when they find out they don't take cards.

[GoodSteward]

I would say NO.
Using cards like this just gets you "a little better buy" on your purchases You could accomplish similar savings by just being frugal and shopping out your purchases.

This is true if you are paying retail for everything. However, I frugal the mess out of stuff so I get the better price plus the cash back. However, I mainly use my cards for things I am buying regardless like food, gas, paying bills,etc. I don't make it a point to go buy stuff just to get rewards. I find that mentality negative for any financial gain since you are spending money you really don't have to spend just to get back a few dollars.

This reminds me of the people who will drive 20 miles to save 10 cents on gas. lol I know someone who did this.

[sv2007]

I believe wealth is created by making the big changes not gathering CC cash backs. A job change (for example) or wise investment move can net you a lot more than (assume you spend $3k/month, at 1% cash back) the $30/month cash back.

Now, this doesn't mean you shouldn't use cash back cards, but it should mean that you probably shouldn't think about cash back as any type of wealth builder. Too small a trickle to be of any impact. (There're meaningful small trickles, and there're too-small-to-be-anywhere-remotely-meaningful ones. CC cash back is the former.)

[disneysteve]

I mainly use my cards for things I am buying regardless like food, gas, paying bills,etc.

Great point. I always explain this when people try to tell me that I'll spend more because I'm using credit. My phone bill, auto insurance bill, cable bill, alarm company bill, college tuition, newspaper subscription, and various other charges would cost the exact same amount no matter how I paid them so why not get the rewards from using my credit card?

[LivingAlmostLarge]

It probably is more a mindset. Someone caring enough about CC rewards is probably overall more frugal and savings minded. So they get more benefit. Wealthy? No.

But in the long term no matter what their income they will come out ahead.

[StormRichards]

Great point. I always explain this when people try to tell me that I'll spend more because I'm using credit. My phone bill, auto insurance bill, cable bill, alarm company bill, college tuition, newspaper subscription, and various other charges would cost the exact same amount no matter how I paid them so why not get the rewards from using my credit card?

I would put every single expense on our credit card but I have some that don't have CC as a payment option and others that charge a processing fee.

[disneysteve]

I would put every single expense on our credit card but I have some that don't have CC as a payment option and others that charge a processing fee.

Same here. Actually DD's college added a fee this year so I had to stop charging tuition. It was a sweet deal though. I charged tuition then took the money from her 529 to pay the bill.

[sv2007]

I would put every single expense on our credit card but I have some that don't have CC as a payment option and others that charge a processing fee.

I think it is against CC merchant contract to charge extra to take CC over cash. So they give cash discounts instead of CC surcharges in their advertisements. Is your "processing fee" advertised as a convenience fee for taking payment over the phone or a CC surcharge?

[StormRichards]

I think it is against CC merchant contract to charge extra to take CC over cash. So they give cash discounts instead of CC surcharges in their advertisements. Is your "processing fee" advertised as a convenience fee for taking payment over the phone or a CC surcharge?

I honestly haven't paid attention to how they label it. If I go to a website to make payment and see there is a fee to us CC, I just log off and then pay the bill from CapitalOne