Cash or Credit?
A lot of very smart people will tell you that you should never get a credit card and if you have them you should cut them up immediately. I’m (N.) not one of those people. I’ve had a credit card since junior high and I have never wracked up a monthly bill that I couldn’t pay in full. And no my parents aren’t rich and neither are J. and I. My mom knew the best way to teach me to manage my money was to let me have it (in very small amounts) and budget it. I had a credit card (really a card with my name but attached to her account) and a checking account in high school. My weekly allowance was deposited into my account and I had to live on that money by either cash or credit. If I wanted more than my allowance I knew better then to overspend. My mother believes if you dig your ditch you can lie yourself down in it. And that’s not to say she’s uncaring because she’s just the opposite but she wanted to raise an independent and responsible child. It amazed me how many of my friends and classmates astounded by the sudden “freedom” of easy credit got themselves into thousand of dollars of debt before our first semester of college was over.
When I got my own credit card account before leaving for college I researched various offers online and decided on a Capitol One Reward Card. At the time you got points that could be redeemed for gift cards or merchandise. I figured I might as well make something from spending money since I paid it off every month regardless. And that’s the key to having a credit card. If you can pay it off every month then to me there is no reason not to get a reward card. Not only that but you continue to make money off your own account until it’s time to pay the bill versus letting someone else collect interest.
A couple years after getting the card they eliminated the rewards program but I figured I would keep the card to maintain a stable credit history. The next card I got was two years ago. My friend T. had a United Air Miles Credit Card and was getting at least one free companion ticket a year. Well I thought since I wasn’t getting any rewards on Capitol One I would switch to using United. I kept the Capitol One card and locked it up, literally for an emergency such as my purse getting stolen which subsequently happened but that’s another story. Unfortunately I haven’t gotten a single freebie for using United although thanks to all my business travel I have collected enough points for a free ticket. When J. and I do decide on our honeymoon we’ll save a significant amount of money by using that ticket.
Now I’m going to stop using the United card because a year ago (I think) Capitol One said they were re-instituting the rewards program only this time you could get cash. It seems that now a days more and more credit card companies are offering cash as a reward and I don’t know why you wouldn’t do it. Even if you only use it for gas and groceries it still adds up. My 20,000 points would get me $40. Of course I could get a $50 gift card at various stores for only 15,000 points but it’s no surprise they would prefer not to give you cash. Now I realize in your regular day to day life this may not add up quickly but why not. You would be surprised at how many points you can collect if you point every single thing (or as many as possible) on a one card. That’s key as well, you have to maximize the opportunity by only using one reward card. I have the added benefit of being able to charge my business expenses on my credit card. I get reimbursed within a week from my company and the money usually sits in my account accruing interest until the bill is automatically paid on the due date. In fact my company has wised up to this and issued us all gas cards. I imagine they are getting some cash or reward for this program which is okay by me.
Do you use reward credit cards? Why or why not?