I will admit it, loud and proud: I am a tightwad!
When I was in college and my mom asked me what I wanted for Christmas, I replied with “socks and underwear”.
She lovingly points out how the women in our family have always known how to “squeeze a buffalo nickel and make it, *ahem*, excrete dimes.” Coupons, BOGOs, loyalty programs - you name it, I’ve probably done it.
Know what I like even more?
Getting paid to do things I would do anyway.
As my “how can I be frugal without being cheap” journey has progressed, I’ve found a way to:
● Do all of my Christmas and birthday shopping for the entire year for $0 out-of-pocket
● Pay for gasoline for only 11 months each year, getting the 12th for free (a value of approximately $300)
● Regularly save 5-10% at the grocery store
My not-so-secret method? Using multiple rewards credit cards.
It is a widely-held myth that having more than one credit card is detrimental to your credit score; recently, I opened a Chase Freedom card (they were running a promotion of a rewards credit of $200 for new accounts, and I said, “Yes, please!”), and I was gratified to see that just that one action increased my credit score from the high 700s into the low 800s. Want to know what’s in my wallet?
1.Citi ThankYou Preferred, from our partner Citi®
I’ve been a Citicard holder since college (tip: holding credit cards for long periods of time is also very good for your credit score). What I love about my ThankYou card is that I can tie it directly into my Amazon account: every time I buy Legos for Christmas or a gardening tool for Mother’s Day, I have the option of applying any accumulated rewards points directly to the purchase in whatever amount I choose. Free holiday and birthday gifts!
This card typically rewards purchases at one point per dollar spent, with an extra point per dollar for restaurants and entertainment purchases; at various points throughout the year, Citi often has promotional periods in additional categories, where you earn five points per dollar for a limited time.
2.Costco TrueEarnings American Express
If you shop at Costco, you already know that credit cards are not accepted - except for the Costco AmEx. This card rewards purchases anywhere, not just Costco, with 1% back in the form of an annual certificate that can be spent in the warehouse. With 2% back on travel and 3% on gasoline - again, purchased anywhere - this is my go-to card for those categories.
In an average year, my annual reward certificate is about $300, or the cost of one month’s gasoline for our household.
As I mentioned earlier, $200 in free money was enough to entice me to sign up and make it the newest in my rewards card arsenal. Chase Freedom also offers the industry-standard 1% back in rewards points, and they offer additional rotating rewards at a 5% level. For example, from April-June of 2015, I can earn 5% back for spending at restaurants, Bed Bath and Beyond, H&M, and Overstock.com.
One of the best ways to maximize rewards is to pay attention to which categories have extra rewards and when, so naturally I will be using my Chase instead of my Citi for those three months (5% at restaurants vs. 2%).
Many retailers would like you to use their card rather than a Citi, Discover, or other issuers’, and will reward you well for doing so. I have a Meijer credit card for its periodic 5% off on groceries, and JCPenney and Kohl’s cards for up to 30% off for store card holders.
I use my cards for every.single.purchase that I possibly can: not just groceries and gasoline, but utilities, monthly health insurance premiums, anywhere that will let me use my card(s) without charging a service fee.
Two absolutely critical points for getting the most out of rewards cards:
Watch out for annual fees. None of the cards I use have them. I look at annual fees as eating up the rewards I get, and because I’m spreading out my rewards for maximum benefit, I wouldn’t be likely to earn enough to cover an annual fee on any one particular card. (There is a whole network of people using airline rewards cards to get free travel, and for them the annual fees are usually a non-issue because they put everything on that single card. I haven’t ventured into that arena yet, and may not ever.) Click Here for the best cards with no annual fees.
If you aren’t paying off your balance in full every month, this approach could hurt more than help. If you look at the amounts of the rewards - 1%, 2%, 5% - they are all likely to be much lower than what you pay in interest. It’s not financially savvy to pay 15% in interest to earn 5% in rewards! I only use my credit cards for purchases that I have cash on hand to pay off entirely when the bill is due (or earlier). Click Here for a list of low interest credit cards.
That being said, strategic use of multiple credit cards is one of my absolute favorite ways to generate passive income - to get paid for what I already do.
What everyday spending could be putting free money in your pocket?
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