Just about all of us use credit cards at one time or another; some folks use them just for emergencies, perhaps others as a way to avoid carrying cash, businessmen use them to cover travel or other expenses, some folks can’t resist using them for all inclusive vacations or diamond earrings. Regardless of your credit card use some cards are better than others, especially if you use them correctly. In my opinion, the best credit cards are the ones that have a low interest rate while at the same time rewarding you for using them. My personal favorite is the standard Discover® card.
My Discover® card pays a certain percentage cash back on all of my purchases plus, every quarter they offer a higher cash back bonus on specific categories of items like home improvement purchases or gas & travel expenses. What makes this really cool is that you have a reasonable window of time after the end of the billing cycle, where you can avoid interest by paying your bill in full. If you do this correctly, Discover® ends up paying you to use their card! Here’s how it works:
My wife and I no longer carry cash, so any purchases we would normally use cash for, we use the Discover® card instead. I keep track of those purchases and twice a month transfer the cash into our savings account (which also earns interest). At the end of the month the Discover® bill comes due and I’ll schedule an automatic payment from the savings account. The balance is paid in full with no interest charges, yet I still earn the cash back AND the interest from the savings account. With the amount we spend, my wife and I earn about $10.00 per month cash back. That may not seem like a lot, but in the three years we’ve had the card, they’ve paid us over $350.00 just to use it. That’s my kind of card.
Another favorite of mine is the Disney® Visa® card. This card rewards us with Disney® reward dollars which can be used at one of their retail stores, their website, or any of their theme parks. The return is not as high as with the Discover® card, but it still adds up. Last month my family took a vacation trip to Orlando, and the reward dollars paid for our meals for six of the eight days we were there. We also bought a few souvenirs and some ice cream, and still came home with 37 cents left. Because the return on the Disney® Visa® card is so low, we try to use it for major expenses like car repairs or airline tickets. In fact, we paid for our trip using the card. That boosted our reward dollars significantly.
When you’re considering a card, certainly look at interest rates and terms, but also look for cards that reward you for using them. Just remember one thing though: the reward is negated if you charge more than you can repay at the end of the month. The credit card companies know that; that’s why they aren’t afraid to offer the rewards. Use them correctly and you can beat the system.
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