Double C’s (Credit Cards):
Double D’s are nice, tough argument. But, nothing gets me as excited as my cash back double C’s (credit cards). With so many credit card choices, it may be difficult to determine (1) if credit cards are right for you and (2) which one you should use!
Whether your preference is cash, points, or some mix and match… you need to know that YOU WIN when you’re in control. The CREDIT CARD COMPANY WINS most of the time, which is why they’re in business. So I’ll repeat, you must be in control. I don’t care how enticing the rewards program is, you will not benefit if you can’t consistently pay off your credit card debt on time. So…how do YOU win?!
How To Win:
Credit cards are not for everyone. Do you act responsibly? If you’re going to use double C’s to your advantage, then you must pay off credit cards on time and use the card(s) wisely. You must be willing to commit to paying off your credit card balance each month. It’s also a good idea to check your spending [weekly] and automate your payments so you’re never late. Just like double D’s… double C’s are worthless if they’re not put to good use!
According to Nerdwallet: there’s almost a 50% chance you’re paying bills late if you’re 18-34 years old…DAMN. Not good. News flash… the fine print usually isn’t much better… did you know that most minimum payments are applied towards the LOWER interest rate balances first? Add annual fees on top of the interest owed for one late payment and that could negate your “benefits” for years.
- Fees section
- Verify $0 annual fees are not just for the first year
- Foreign transaction fees
- Balance-transfer fees
- Be aware of 0% interest for 12 months…
- Interest still accrues, it’s just being waived by the lender
- High Risk: if you make a late payment or do not pay off the entirety of the debt within 12 months then ALL the interest will be added to the amount you owe
Why I Prefer Cash Back (versus points or other rewards):
- Cash back is easiest… not much thought needed
- Cash back doesn’t require additional spending
- Ex: points may give you “free” airfare, but then you may spend additional money on that trip that you otherwise would not have spent…$500+ hotels, food, rental car, etc.
- Points don’t mean anything to me; I prefer tangible cash
- No wasted time looking for which “reward” gives me the most bang for my points
- My cash back never gets lost and never goes unused!
What I Use:
- 5% cash back on rotating categories, 2% on 1x of your choice (restaurants, groceries or gas), 1% back on everything else
- I use this for fast food (5%), going out to eat (2%), cell phone / etc. on 5% rotational
- Beware: You must sign-up for the categories every quarter in order to receive bonus % cash
- Beware: Upon sign-up, I received their basic 1% cash back card
- You may have to use the 1% card for 3-6months and then call to request an upgrade to the 5% – it was relatively hassle free
- 3% gas and 2% groceries…for the first $2,500 spent on gas/groceries each quarter ($833 per month on gas and groceries before 3%/2% limit is exceeded)
- I use this for gas and groceries
- I redeem awards into my BoA checking/savings account and receive 10% more cash back
- = 3.3%/2.2% cash back
- Sign-up benefit: $100 cash reward bonus
- 1.25% cash back on all purchases [when used towards travel]
- I use this for miscellaneous category spending, airfare, travel, taxis
- No charge for international usage
- Sign-up benefit: $200 cash reward bonus
I try to use a couple no annual fee cash back credit cards. I prefer using cash back credit cards, because it’s straightforward and convenient. As a young professional, I don’t want annual fee credit cards for a few reasons:
(1) I don’t want to feel pressured to use the card… doesn’t $99/year make you feel wasteful if you don’t use the credit card? Not only that, but it’s easier to stay on a budget when there are no shiny or additional features to distract you from your goals.
(2) I want to keep the card open. Not only do annual fees sound gross, but having an annual fee may make you close the account quicker, which then hurts your credit score. Unfortunately, credit scores can be an important factor for home mortgage interest rates, auto loans, etc.
(3) Does the annual fee justify itself? Free credit cards aren’t “free”… High interest rates can easily wipe out a couple years’ worth of “benefits” if you miss a payment. So, why risk it by adding an annual fee?
Do you need to re-evaluate your credit cards, or want to open a new one? Contact me and let’s figure out the perfect plan for you!