Call me compulsive, call me obsessed, but tell me it is cash back and I smile. This year this obsession with cash back will net me just over a cool $1000 in cash back and that my readers is a real Christmas present. Maybe $1000 in free money is nothing to you, maybe you think it is too much trouble, but if one does this every year for 50 years that is $50000! Think what you could do with an extra 50 grand? If that kind of money does not interest you do not need to be reading my posts anyway. Yeah, I know many under 40 year olds never take the time to check their bank statements, never have concern about how many $3 cash withdrawal fees they pay, and never look at the taxes being taken out of their paycheck. Seems for many of the younger crowd the "experience" and not having to deal with "lifestyle" changes are more important than having $50kextra. Call it my inner Clark Howard but I do, and here is how I do it for those interested.
I have three cash back credit cards and before I go any further if you can not control your spending you are best to stick with debit cards since to make this work you got to pay off credit cards monthly. You can "cheat" the cycle and pay off only what is in the monthly billing knowing that if you time your spending you can wait an additional 30 to 60 days to pay any bill without incurring any interest charges. But in the end paying interest virtually kills any gains you get from cash back.
The first card pays 1% on all purchases. During the last quarter of each year they up the percentage to 5% on certain department stores and even higher upwards to 10% on certain stores and online. They also bump the 1% to 1.2% on all purchases during that time. I use this card as a last source of spending since it is the weakest payer I own. Note that almost all cash back cards max out at around $300 annually, with a provision for the year end 5% bump not being included in the max amount.
The second card pays back 5% on all gas purchases and anything bought inside the convenience store location. Yes, I have checked the discount gas prices and they are higher than the brand gas price with the 5% kickback. Add in that this card pays 2% on all dining out, so I swipe this one for every dining out food purchase even the $4 I spend at Bojangles. Add to that 2% on all hotel purchases. All other purchases are at 1% cash back.
The third card is one that really pays back. First off they pay 1% on all purchases like the other cards. It also pays 2% on all travel, such as airlines. The real deal with this card is the rotating quarterly 5% cash backs. Here is a partial list, drug stores, grocery, home improvement, furniture, movies, charity,dining out, and department stores. So time your annual purchases for items needed at certain stores and you can really add up the cash back here. This card also has a provision for upwards to 10% cash back on certain online and speciality store purchases.
So with a normal year of spending one can amass $1000 in cash back from these sources. If I spend money I ask if they take a credit card. Tax payments, insurance for home, health, and vehicles, telecom, cable, utilities, just about every service you buy, can now be paid with a cash back card. The only three bills I currently have that do not take credit cards are my housekeeper, car payment, and home equity line payment. The first one is my choice, the last two I am working on. The most interesting item I have bought with cash back...a casket. Frankly I tell people who I buy goods and services from that if they do not take my cards I find someone else with which to do business.
Trust me this is not hard to do. Once you get into the habit you instinctively know which cards to use and where to use them. During the year I do not cash out by cash back but save it for the end of the year so as to make it a Christmas present to pay year end bills. So consider moving the spending you already do to cash back cards.
If you have interest in what each of the three cards are e-mail me and let me know. I prefer not to place card names online where identity thieves can make merry.
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