1,575
edits
Changes
no edit summary
*I treat my credit cards like debit cards and I use my checking account to determine how much "spending power" I have. If I don't have cash in the bank, I don't buy things with my credit cards (except for emergencies). In order to avoid interest payments you can adopt one of two strategies:
*#Pay off your full statement balance every month. You can even setup AutoPay to ensure you never miss a payment.
*# (This is what I do.) You can set yourself a calendar reminder to pay off all of your credit cards every 1-2 weeks (or some other interval that is less than the typical monthly period). This ensures that you don't carry a balance. It also helps keep your checking account "accurate". When you're funneling charges through credit cards, but looking at your checking account to know how much "spending power" you have you can get tricked by the balance on the credit cards not being reflected in balance of your checking account. By paying them off more frequently you keep your checking account more up to date.
*There are two strategies on how to use your rewards/points/cashback
*#Let the points sit in their respective pots at each credit card's site until you're ready to use them. This has 2 advantages:
*##You forget about the points until you need them and then are pleasantly surprised at the amount of money you've saved up. Similarly you aren't tempted to use the points frivolously because you don't often look at the balance.
*##Many cards give you points that you can redeem for cash or a gift card or spend directly on purchases. Gift cards and direct purchases can often be redeemed for more value than the cash equivalent. By leaving the points in the care of the credit cards for longer you give yourself the option of an alternate redemption method if it works out for you.
*#Frequently take the points out, in the form of a check or transfer to your checking account, or as a statement credit. This has a couple advantages:
*##If you do this you can put the cash in something like a High Yield Savings account (I use [https://www.marcus.com/us/en Marcus by Goldman Sachs] which currently provides High Yield Savings accounts with a 2.05% APY. This means you earn a little bit of interest on the money in the account. Now you are earning interest on the cashback that is sitting around waiting to be used.
*##Some of these cards only offer cashback as a statement credit. If you save up the rewards and can only redeem for a statement credit, you can't really "use" the money immediately unless you charge your new expense to that card. If take the statement credit and then move the equivalent amount from your checking to your High Yield Savings it essentially gives you access to those funds.
=Beginner: Citi Double Cash Card=