Credit Card Strategy

The following is a staff writer post from MikeS.  He is a married father of 2.  So, with the cat, he ranks number 5 in the house.  He loves numbers and helping people. Please leave any questions or comments below for either Mike or Crystal.

I used to have a fairly basic strategy when it came to my credit cards…

I only used one.

I didn’t have multiple cards in my wallet.  There was one card that was used for everything.  I certainly tried to maximize the rewards or cash back that we would get from that card, but I really didn’t spend that much time thinking about it.  I simply paid my bill in full every month and pocketed the rewards that I earned.  My situation today has certainly changed.

Multiple Cards

The first time multiple cards came about was so that both my wife and I could have our own personal cards.  Rather than use our joint card for our own purchases and then figure out how to transfer money between our accounts, it was just easier to have separate cards.  The rule was, and still is, the card is paid in full and you are not allowed to carry a balance. I did not earn much cash back with my card, as I wasn’t spending much.

Extra Cash Back

It was probably about 6 months or so ago, that I came up with an idea to earn some extra cash back.  My wife had the Bank of America card that pays $25 per quarter (an extra $5 if you have another Bank of America account) if you pay more than the minimum due on your statement and paid on time.  I noticed that we had at least 1 recurring charge that would be more than the minimum on a statement every month.  So, I opened a card in my name and put this recurring charge on it.  I have set up the account to pay the full balance every month.  For this, I have received $30 a quarter.

The next few changes occurred more recently.  The first was actually a debit card.  I had opened up a Discover checking account around year-end to take advantage of a $50 incentive for new accounts.  One of the perks of the checking account is that it pays you $0.10 every time you use your debit card.  Since we do some of our grocery shopping at Aldi’s, which only takes cash or debit cards, I thought why not use the Discover one.  I’m certainly not going to get rich with, but why not collect $0.10 for something I was doing anyway.  I simply transfer the food money from my normal checking account to the Discover account at the beginning of every month.

The other changes are credit cards, two to be exact.  The first was a solicitation we received in the mail.  Since we are members of BJ’s Wholesale club, we received an offer for their branded credit card.  The biggest benefit to the card was receiving 5% back on in-store purchases.  On average, we easily spend about $200-$250 a month at the store.  So, that’s easily $10 a month in cash back rewards.  In addition, there is a $0.10 off per gallon of gas at a BJ’s gas station.  Since there was no annual fee, I signed up for the card.  The second card is the new card offered by Citi.  You earn 1% cash back on purchases and then another 1% cash back when you pay your credit card bill, for a total of 2%.  We’ve been using the 1-2-3 card from Bank of America as our main card and have averaged around 1.3% to 1.4% cash back.  By my estimations, making this switch could bring in an additional $250 a year or $20 a month.

All in I will probably earn about $1,200 in rewards this year for doing what I was going to do anyway.  By not carrying a balance and not paying any annual fees, I am able to bring in some extra money.  I am not going to get rich off this money, but it helps pad the budget just a little bit.  I’ll take any extra cash I can.

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