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Posted: 3/17/2006 2:22:14 PM EDT
[Last Edit: 3/17/2006 2:23:42 PM EDT by ARHighPower]
Another thread got me thinking about credit cards. I've always used credit cards for anything that I could, I have always paid the balance in full each month. My main purposes for using credit cards was to help credit record, make purchasing easier (no dealing with pesky cash) and safer (easier to get a refund when product/service was not as expected), I could make interest on my spending cash by letting it sit in the bank until the end of the month, and because you can get free money.

Free money comes in two different ways, both in cash and in products/services that you would normally pay for. AMEX is big on "points" that add up to get you free products/services. Their selection was pretty good, they had things that I would normally use such as gift cards to places like Toys'R'Us (for the kids) and Sharper Image (for the grown up kids, ME). I currently use Cabela's card because it seemed to be a good deal and I do a lot of shopping at Cabelas. They offer a point system that is equal to 1% of your purchases from anywhere and 2% from Cabela's. Those points can be used at any Cabela's (online or in store) at any time. They gave $10 worth of free points just for signing up.

After doing the math, I figure it will take $10K worth of normal purchases to get $100 of free money, or $10K worth of Cabela's purchases to get $200. That's just not so appealing anymore.

So what cards do you free money getting guys use? How do you work the system?
Link Posted: 3/17/2006 7:34:17 PM EDT
No one?
Link Posted: 3/17/2006 7:37:49 PM EDT
i use USAA's platinum mastercard. I get 1% back on ALL purchases, and it's like a 5% APR card too, so it's the best deal going, especially for a young guy like me
Link Posted: 3/17/2006 7:44:19 PM EDT
[Last Edit: 3/17/2006 7:45:07 PM EDT by Florg]

Originally Posted By Napoleon_Tanerite:
i use USAA's platinum mastercard. I get 1% back on ALL purchases, and it's like a 5% APR card too, so it's the best deal going, especially for a young guy like me



I get the same deal through Providian/WaMu, with 5.9% interest, albeit I pay in full every month.

ETA, I also get my credit score checked every month for free. This month I reached 800, woot.
Link Posted: 3/17/2006 7:46:46 PM EDT
Link Posted: 3/17/2006 7:58:04 PM EDT
Chase Cash Rewards - 1%
Citibank Dividends - 1% up to $300/year
REI (US Bank) -1% other purchases, 10% REI non sale purchases - issued as a dividend (can be used like a gift certificate for purchases the first half of the year, turned in for cash later in the year)

I try to put almost everything on credit cards. I pay my insurance, groceries, pretty much everyone that takes credit cards without a surcharge. I used to work for a small company where I could buy computer equipment on my kickback cards, get reimbursed within a week and collect the interest for a month before I had to pay the bill. That's how I found the previously undisclosed $300/year limit on Citibank's card.

The trick is that you have to have great credit to be eligible for the cash kickback cards. They basically give you the 1% because they know you're going to pay your bills, so it's a good deal for everyone. The Citibank card I got by a fluke. You can try the same tactic, but it won't always work. I called to cancel my card and they passed me to a retention specialist (someone whose job is to keep your business) and they asked me why I was getting rid of the card. I told them I don't use it because I get cash kickbacks on my other cards (this was true, but there is no way for them to verify this) and had much higher credit limits on other accounts. They upgraded me to the Dividends card and substantially increased my credit line.

Another tactic if you've got enough self control to not drown in debt is to use cards often enough that they will give you a low rate balance transfer option and then sit on the money and collect interest. You have to factor transaction fees and offer expirations into calculating who is sticking it to who in this game. I've got a couple that I'm currently abused for fixed low rate until paid in full. I'm making more in savings than I am paying in interest, so it'll take a while for them to get their money back. If you do one of these, make sure there's nothing autobilled to the account and lock it away until it's paid off. If you charge anything, that collects interest at the purchase rate, which is higher than the promotional rate. Your payments go towards lower rate balances first. They're counting on you to not do the math and end up paying them more in interest. Unless you're really careful and can set the account aside for a long time, don't try to take advantage of these things. A lot of people drown in debt by thinking they have a ton of money in the bank, without considering the debt that got that money in the bank.

Also, if you have a balance transfer that has to be to another credit card, you can take advantage of those too. If you have a credit card and checking account that are available in the same online banking account, you can probably do a transfer from the credit card to the checking account. Do a "balance transfer" to the credit card, then do a transfer to the checking account and you can stick that money wherever you want without having paid for the privilege of turning a "balance transfer" directly into cash.

If you eat out with friends or otherwise go places where most people pay cash and there are significant bills, put the whole bill on your kickback card and pocket the cash. I refer to this as "cheating" because you're getting a cash advance that's charged as a purchase. Just make sure you have the money at the end of the month to pay that bill. This is a great way to avoid going to ATM's. It's a stupid way to get extra money to pay bills.

If you have self control and a firm grasp of how the banking industry works, you can build great credit while netting a fair bit of change yourself. You're not going to get rich doing any of these things, but you can stick it to the man in a small way and make money at it.

Does that answer your question about working the system?
Link Posted: 3/17/2006 8:03:47 PM EDT
American Express Blue - I have used points to get a North Face Jacket and $100 to spend a Bananna Republic (for the Wife)
Link Posted: 3/17/2006 8:05:00 PM EDT
My citibank card gives me 5% on gas and groceries. 1% on other purchases.
Link Posted: 3/17/2006 8:08:43 PM EDT
[Last Edit: 3/17/2006 8:29:01 PM EDT by JohnTheTexican]
I use Discover for everything I can except Amazon. For Amazon, I have an Amazon Visa. Discover givis 1% cash back on all purchases. With the Amazon Visa, you get Amazon gift certificates, but you get 3% on Amazon purchases (1% on everything else). These two are the only cards that I actually use, and I pay them both in full every month. About the only time I use cash is when there's an upcharge for credit cards, and that seems to be limited to a few firearms-related purchases.

I carry a shitload of CC debt on other cards (divorce isn't cheap), but it's all on "life of loan" promotional balance transfers, with interest rates ranging from 0% all the way up to 3.99%. If I were to use any of those other cards, all my payments would go to the balance at the promotional rate, and the new charges would accumulate interest at some ridiculously high rate until the whole thing was paid off. So I keep one set of cards that gets paid off every month for buying stuff and a different set for carrying balances. I know the prospect of new charges on top of the promotional rate are the only reason the CC companies offer those promotional rates and that I'm really not playing fair in their eyes, somehow I can't bring myself to feel bad about it.

As I said, I have a shitload of CC debt (we're talking $60K), but I pay maybe $2500 a month over the minimum, so they're getting paid down. Occasionally they'll offer me 0% on balance transfers with no transfer fees for six months or something similar on one of the cards I've paid off or nearly paid off. When I get one of those, I figure out how much I've got budgeted over the minimum payments, pay off any balance on the card, and then transfer from my highest rate card whatever I know I can pay back by the time the promotional rate expires. When there are balance transfer fees, I only do the transfers if I'm going to transfer at least $5K. The fees are typically 3%, with a $50 maximum, so the promotional rate can end up costing more with smaller transfers. The last transfer I made like this was almost $25K at 3.99% for the life of the loan. I put the money in my checking account, and then paid off several higher rate cards with only one $50 transfer fee. Again, I know that I'm not playing the game the way the CC companies want me too, but I still can't bring myself to feel bad about it.

The bottom line is that I'm carrying $60K on credit cards, and I'm paying less in interest than I would after taxes on a home equity loan. I believe they're actually losing money by doing business with me. Except the Amazon Visa and Discover. The CC companies are making a little on those, but it doesn't cost me any more than paying cash, and I even get a bit back. I suppose the merchants have to figure the costs of CCs into the prices, but I figure I come out about even; it's the suckers who pay cash who get stuck with the bill. But after reading all the self-righteous "I'm too responsible to use credit card" posts, I don't really feel bad about that either.

ETA: October 2007 the CC debt will be gone. Then I'll save what I was paying them for about a year and buy myself a new car for cash. A new car or maybe a couple M-16s.
Link Posted: 3/17/2006 8:15:13 PM EDT

Originally Posted By drjarhead:
My citibank card gives me 5% on gas and groceries. 1% on other purchases.



Is the 5% a short term promotion, or is that the regular deal?
Link Posted: 3/17/2006 8:17:24 PM EDT
[Last Edit: 3/17/2006 10:50:42 PM EDT by drjarhead]

Originally Posted By JohnTheTexican:

Originally Posted By drjarhead:
My citibank card gives me 5% on gas and groceries. 1% on other purchases.



Is the 5% a short term promotion, or is that the regular deal?



Regular deal. There is a max though - it is either $300 or $500 back yearly. Whichever it was, I got it all.
Link Posted: 3/17/2006 8:18:43 PM EDT
[Last Edit: 3/17/2006 8:43:06 PM EDT by ARHighPower]

Originally Posted By hanau:

www.daveramsey.com/etc/cms/index.cfm?intContentID=3478

Can you prove any of that drivel?

For example:


Truth: Responsible use of a credit card does not exist.
It has for me for 30 years. That is a pretty outrageous statement for him to make, and for you to apparently agree with. So please explain and prove that statement to be true, since it is stated as fact.

Next:

There is NO positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system!
Ok, now prove this to be true. I make money because I make interest on the cash that I would normally spend (it stays in the bank until the end of the month) and I also make money be the free products/services or cash back that I get.

An example of Ramsey's ignorance on this topic:


Now let's talk about the rebates. If you were using a credit card at 5 percent, you would have had to have spent $80,000 to get $4,000 rebates on new cars that lost $6,000 of value when you drove them off the lot. That is not a good deal!
Now how does that make any sense?? If you are going to buy an $80K car you can either pay cash and get an $80K car in return, or pay with credit and get both an $80K car PLUS $4,000 in return. So what is his point? How did you go wrong by using a credit card? I understand that some people are against all use of credit cards because they know that they can't beat the urge, but this is preposterous. I usually respect Ramsey's opinion, but what he says here is a bunch of BS.

So PLEASE prove those two points to be true. They might work for irresponsible people or people is distress like JohnTheTexican who is suffering from a divorce, but to make those generalizations about everyone is ludicrous. It is no different than stating that "all guns kill people" just because some people choose to be irresponsible with them.
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