AUTOMATIC REBATES WITH EVERY PURCHASE
A previous article gave you ammo to hunt down good prices on
eBay. Once you've found a good price for whatever,
wouldn't it be nice to get a rebate each time?
Without any extra effort on your part? As easy, in fact,
as using a credit card?
An easy way to spend from 0.5% to 3% (or more) less
than you would otherwise is to use a cash back, or
rewards, credit card on as many of your everyday purchases
as you can.
But pleeeeease don't use a credit card to save!
I can't stress this enough. I am not telling you to
go into credit card debt just so that you can get a huge cash back
reward. Paying 17.99% annual interest on a rebate credit card to earn a 1%
rebate just isn't worth it!
Using a cash back credit card is a good idea only if your
spending habits are in check. That is, you use a credit
card only for convenience and not for credit -- meaning
that you pay off your balance in full every month.
Ok, you use credit wisely. Which credit card is best?
That's a hard question to answer, since I don't know
what you like to save for. If you really like a
particular brand of something (GM for instance) or like
to fly on a particular airline (Southwest for example)
then sign up for a credit card that gives you rewards
toward a new GM Truck or toward a Southwest airline
ticket. You'll typically accumulate rewards faster
this way than with a cash back credit card, because your
rewards are tied to only one company.
For my taste, I like cash back. The more, the better.
The faster, the better!
I chose the Chase PerfectCard™, and I'll share my
reasoning. Some credit cards give back more than the
Chase PerfectCard™, which gives 1% back on all non-gas
purchases and 3% on all gas purchases (6% for the first 90 days).
But in order to get the higher percentage on all purchases (usually 2%)
you may have to spend a lot; otherwise, you get
only around 0.5% cash back.
Since I don't spend that much, 1% cash back beats 0.5%. Plus,
the gas purchases bump the average percentage back up to maybe
1.1%. Your percentage back will depend on how much you use it for gas
purchases.
You know what's the best part? I only have to wait one
billing cycle for the rebate -- it's credited to my next
bill! Some cards give you a check only once a year!
The Chase PerfectCard™ has no annual fee the first year, and none
thereafter if you use the credit card nine or more times during the year (otherwise
the fee is $19). Please check the terms of service carefully before signing up.
A few points to consider
So, if you typically spend $1,000 a month with your
credit card and pay it off each month, you can put $120
cash back per year right back in your pocket by simply switching
credit cards to a 1% cash back card! Switching the credit card is the
hardest part of all this!
A few things to chew on while you're switching, though:
- Again -- don't spend to save! It won't work.
- Once you're sure that your old credit card won't be
charged again, and you have your happy new rebate
credit card in your hand, cancel the old credit card by
calling up the issuer and destroy the cards. This
way your credit rating won't be hurt because you
carry too much credit.
- If you're looking at frequent-flyer cards or the
like, check how restrictive the rewarded tickets
are. Also, realize that the level of restriction
is subject to change!
- Look at how much you spend to determine which
cash back credit card is the best. If you've got a
seven-figure income and can afford to put $20,000
a month on a credit card with no problems, then go for
the 2% ones -- you'll probably get close to 2%
back!
- The fine print might obliterate your rebate if you
get blind-sided. Service fees for lack of use,
over-the-limit fees, late payment fees, etc. might
be substantial. Make sure to read the terms and
conditions of any credit card you sign up for!
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