Credit Cards Can Save You Money

Ahoy mateys!

This is the Captain speaking with my feathery companion Norry to discuss finance!

-And lie to you!

What?! No! We are not going to lie to our friends!

-But you said we were going to discuss finance.

…and we are…

-No! The title says “Credit Cards Can Save You Money.” Obviously we are either lying to our friends or this is going to be one of those parody articles where you give good advise disguised as bad advice.

Ok, you have a point, but I really am being honest!

Let me explain.

I have two credit cards that I use:

-Chase Freedom

-American Express Starwood Preferred Guest

Both of these cards offer rewards and points.

With my Chase card, I get 1 point per dollar spent which can be redeemed at a rate of 100 points to a dollar.

-What? Was that English?

Simply put, for every $100 spent on the card, I get $1 back. Or a savings of 1%.

-1%…seriously? 1% savings and you are here saying “look how much I saved!” Ridiculous!

I agree.

-Wait, what?

I agree. While it is nice to have an automatic 1% on the purchases I’m already planning on making (and some purchases can give up to a 5% savings depending on the quarter), a 1% savings rate sucks and I could do a lot better.

Enter the American Express Card.

I just signed up for this card in August because it had a very lovely sign up bonus of 25,000 points after spending $3000. A bonus I’ve already qualified after just a month and a half.

These points can be used in lots of places, but the air most helpful to me traded for airline miles.

These 25,000 points will pay for my flight home for Christmas vacation, a flight which would have cost me about $300.

$300 savings from $3000 spent = 10% savings rate.

Now that’s not too shabby.

-Hmmm, alright, I can kinda see it…but that 10% rate isn’t sustainable.

Very true. Which is why the title of this post is “Credit Cards CAN Save You Money” instead of “Credit Cards WILL Save You Money.”

-Aha. Tricky.

Meh. I’m perfectly happy with knowing I am saving 1% of everything I spend without doing any work.

Heck, that 1% is better than a lot of bank savings account interest rates these days!

A couple words of warning though:

1-This only works if the credit cards are paid off in full every month. With credit card interest at 20% against you, you cannot win if you don’t pay in full. I never carry a balance on my credit card for that reason.

2-Opening a 2nd credit card helped me this year, but opening more would only hurt my credit score. I’m going to be chilling with these cards, taking advantage of seasonal offers, for a couple years before I even consider getting another card.

REMEMBER:Credit cards are tools.

Used properly and safely, you can get some easy money.

Used improperly, you can wind up in a WHOLE lot of trouble.

-Hey Captain, can I borrow your credit card.

Nope.

-What, you don’t trust me?

Not at all.

Until next time, avast ye scoundrels!

Photo Credit: Credit.com

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