Rewards Credit Cards

by Mack Bartlett

We use our credit cards for a lot of things. In fact, we use them for almost everything. Here’s an interesting tidbit: the only thing I’ve found I couldn’t buy with a credit card was a money order. Can you believe that? I want to know what powerful lobbyist in Washington made sure I had to go through the credit card companies’ exorbitant cash advance fees.

Anyway, my point isn’t the slimy lobbyists. My point is that if you’re going to use your credit cards for every purchase under the sun you might as well get paid.

What? Get paid to use your credit cards? In a sense, yes. Rewards credit cards are making it possible for credit card holders to get a little something back. Call it a thank you from the banks – a thank you for those billions of dollars in credit card interest we all pay every year.

Let’s make one thing clear – the credit card companies make a lot of money whether you ever carry a balance on your card. I’m fine with it. Companies need to make a profit to survive. Every time you swipe that card the merchant pays visa a fee. Multiply a few cents times millions of transactions per day and you’ve got large stacks of cash. I’m only telling you this so you understand the credit card companies aren’t going out of business even if you pay your balance every month. So do it.

In fact, the key to making rewards credit cards a good deal for you is to never carry a balance. Think about the different rewards you can get – cash back, points toward purchases, airline miles, etc. In every case, one point or one mile has a dollar value you never think about. For example: if a $50 laptop back costs 1,000 points to purchase, then each point is worth 5 cents. So you get 5 cents for every point, and you usually get 1 point for every dollar you spend.

That’s all great right? But wait, what if you spend $500 per month on your card, and you carry the balance from month to month. It’s not going to take very long before the finance charges will far outweigh the rewards points. I doubt they want you thinking about that. They want you thinking about the ‘free’ stuff you can get.

Listen, I want you to take advantage of rewards credit cards. I love mine. I take at least one trip each year courtesy of American Express or Capital One thanks to their airline miles programs. All I’m saying is you have to make sure those ‘free’ miles don’t cost you hundreds of dollars.

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