Credit cards – do you use them? Friends are often surprised to find out that I use credit cards. Not only do I use them, but I make money on them! They are just another tool and the key is being responsible. You have to follow the same basic rules – live within your means and don’t lose sight of your goals. You continue to buy your normal items, except now, use credit cards. Like coupons, credit cards are not intrinsically evil. Rather, they are  a hook designed by people to take money from your pocket and put it into theirs (actually, that’s what every “for profit” business does). Perks are offered by certain credit card companies knowing that the majority of people will overspend, carry  a monthly balance, and thus accrue high interest charges and service fees (your pocket to their pocket). Some will say that we are taking profit from the stores. Yes, the businesses that accept credit cards have to pay 1.5-3.5% of the sale to the credit company (and card processing company) but it is another hook they are using to ease your money into their pocket.  When we had a small retail business, we initially accepted most credit cards to help people buy our products (Polish pottery and other imports from Europe), but it was our choice to accept the credit card usage terms or not. (My husband used to joke with customers telling them that their “Sky Miles” went to his account.

I use credit cards for the majority of my purchases and receive at least 1% cash back. That may not seem like much, but over the year, it adds up! Currently, I am using an American Express card which has no annual fee but for the first year gives me:

• 5% back on gas purchases (up to the first $150 purchased per month)
• 5% back on grocery purchases (up to the first $250 per month)
• 5% back on dining out (up to the first $250 per month)

While we seldom eat out and our groceries don’t cost more than $250/mth, I do try to optimize how we spend our money for gas. Our normal monthly gas purchases do not exceed the $150 maximum on the AMEX. But sometimes, like this past December, we went to work on our house in Alabama and visit family in Georgia, and we did use more gas. For those situations, I have a Discover card as back-up which gives 2% back on gas purchases, up to the first $100 per month! After my first year is up, these AMEX perks will cease and I’ll cancel the card and look for the next best deal available. I have been doing this for years and there has always been another deal – I’ve NEVER paid an annual fee for a credit card.

How, you might ask, do I keep it all straight? I made small adhesive labels for each card stating what the card is used for and the maximum amount. Then, in our van (our family car is a 15 passenger van), I have a index card on which we write all our gas purchases and the corresponding credit card. When the limit on the card is reached, we simply switch to using the back-up for the remainder of the month. I am not an organization fanatic – the index card is often dirty, tattered and coffee stained by month’s end – it would never make it two months!

This may seem like too much trouble, but for 2008 I made over $500 on one card! For other large purchases (i.e. the vines for our vineyard), we use a Visa card through LL Bean. The “bean points” accrued have been used on many LL Bean clearance items, from winter milking coats to summer tank tops. (I accidentally tried to use them at LandsEnd but as nice as the operator was, she couldn’t accept them . That brings many a laugh in our family.)

Again, the key is discipline in your purchasing, complete bill payment at the time it is due (nothing carried over to the next billing cycle!) and then maximize the offered perk. Take the time to investigate what perks are available to meet your family’s needs.

Photo Credit: Bing Images