“What this country needs is a credit card for charging things to experience.”
–Tom Wilson
“Any time we talk about rewards cards…this is for people who are just using it as an alternate form of payment.”
–Jason Steele
FIREd at 46
“What this country needs is a credit card for charging things to experience.”
–Tom Wilson
“Any time we talk about rewards cards…this is for people who are just using it as an alternate form of payment.”
–Jason Steele
I had the pleasure of interviewing the credit card experts at PT Money to discuss a bunch of questions that our readers had about credit cards. They have a great credit card resource page – good enough for me to feature it first in Chapter 2 of my Ultimate Guide to Managing Your Day to Day Finances.
However, before we get into the interview, I wanted to give some thoughts of my own about credit card usage, rewards cards, and the like. I used to work at Capital One myself (no, I wasn’t responsible for your junk mail, nor was I responsible for the Viking ads), so I have a little experience with the industry. I used to work with guys who would run up $250,000 in credit card debt on 0% interest no fee balance transfers, put it all in an ING savings account getting 2% interest (this was in the mid-2000s), and make $5,000 just for playing accounting tricks with the credit card issuers. It was very, very tempting to get into that racket, as I had a good credit score and was neurotic enough to make sure that I would get the balances paid off before incurring interest and fees. The risk, though, was that something would happen and I wouldn’t actually pay off the balance from the transfer and wind up owing some ghastly amount of backdated interest, far negating the benefits.
I even looked at using rewards cards to pay things like my mortgage when I had one, property taxes, student loans, and even the Internal Revenue Service. I figured if I had to make those payments anyway, I may as well get some rewards for them.
There was one problem with my scheming.
Credit cards usually charge a cash advance fee, generally 3%. Rewards rarely exceeded 1% of cash spent, so it would cost me 2% extra to get those rewards.
That’s math that even Monkey Brain doesn’t like.
So, I keep it pretty simple. I use a 1% cash back rewards card from USAA. I like plain old cash. Call me a Luddite.
However, there are some risks to the rewards strategies that you need to be aware of.
Here’s what we use our credit cards for:
I’m a big believer that spending is like a gas. It will expand to fill the container in which it is put. Budgeting shrinks the container. Don’t use rewards that you get on your card as an excuse to expand the container. Do it wisely, though, and you might get some nice perks for spending money that you would have spent anyway.
With that, here are the highlights of the interview. Don’t forget to check out the great PT Money credit card resource page too!
Without further ado, here’s a TON of great information about rewards credit cards!
Best Rewards Cards Interview with PT Money Team
What did you think of the discussion? What other credit cards or rewards credit cards questions do you have? Who would you like to see me interview next? Talk to us in the comments below!
I remember those accounting tricks that you speak of…we talked to many of those clients ourselves. II agree it is important to keep it simply otherwise you could caught between a rock and a hard place. Many individuals simply don’t have the right motivation when dealing with credit cards a and think somehow that they can be free money.
Hi Roger! Thanks for dropping by! Sorry for the delay in approving. Your comment got caught in the spam queue (which I rarely, admittedly, check).
It’s a fine line to walk between getting rewards for your spending and not spending more. Since we’re not invoking pain centers when we spend, we justify the rewards as the excuse to spend more. We fell for the same thing: “Hey! Why not get this 1% cash back” led to “Um…where did all of the money go?” It was a pretty quick trip to get there, too.