Advice on rewards cards?

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takeshi
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Re: Advice on rewards cards?

Postby takeshi » Thu Jan 28, 2016 8:52 am

LBJFTW wrote:as the current credit card companies that I do business with already like to pay me for purchasing gas, food, hotel stays, travel, and retail items without giving them a dime of interest or fees.

They're getting swipe fees and merchants are including that in the price of what you purchase from them. It's not as transparent but your creditors are still making money off of you. They don't just give out rewards out of the kindness of their hearts.


Brad Bishop
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Re: Advice on rewards cards?

Postby Brad Bishop » Fri Feb 05, 2016 10:29 am

I used to pay all of the bills that I could with a credit card (not carrying a balance) mainly so that I could:
1) Simplify my life - not have to pay each little bill
2) get some kind of cash-back on it.

The only rule I had was not to pay a fee to do this.

I stopped doing it a few years back because I noticed that these bills became invisible to me. If the cable bill and the mobile phone bill and the whatever bill are all hitting your credit card and you're just paying it then you stop having a sense of what you're actually paying out. You're just paying the huge bill each month and going on your way.

Now I specifically pay each bill via my bank's online bill pay so that I know:
1) my mobile phone bill is $85/mo
2) my cable bill is $60/mo
3) my electric bill, while it fluctuates throughout the year, remains in the ballpark of what I expect.

For me, it just gave me a better handle on what I was spending to specifically pay each bill every month. I do the same thing with paying cash most of the time. It gives me the sense of what is actually going out the door instead of just everything accumulating and having that big bill.

kdm31091
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Re: Advice on rewards cards?

Postby kdm31091 » Fri Feb 05, 2016 10:38 am

Brad Bishop wrote:I used to pay all of the bills that I could with a credit card (not carrying a balance) mainly so that I could:
1) Simplify my life - not have to pay each little bill
2) get some kind of cash-back on it.

The only rule I had was not to pay a fee to do this.

I stopped doing it a few years back because I noticed that these bills became invisible to me. If the cable bill and the mobile phone bill and the whatever bill are all hitting your credit card and you're just paying it then you stop having a sense of what you're actually paying out. You're just paying the huge bill each month and going on your way.

Now I specifically pay each bill via my bank's online bill pay so that I know:
1) my mobile phone bill is $85/mo
2) my cable bill is $60/mo
3) my electric bill, while it fluctuates throughout the year, remains in the ballpark of what I expect.

For me, it just gave me a better handle on what I was spending to specifically pay each bill every month. I do the same thing with paying cash most of the time. It gives me the sense of what is actually going out the door instead of just everything accumulating and having that big bill.


I do think you raise a great point. One has to be really careful with credit card spending in general, but especially paying bills IMO, because it can dilute the "feeling" of spending.

If you are really disciplined every single month maybe it's not an issue. But I understand about the "big bill at the end of the month" being kind of more stressful vs just the money coming straight out of your bank as you go. You can avoid the big bill by simply making multiple CC payments per month but some people don't feel the rewards are worth doing all that.

I think the main thing to remember with credit cards and rewards is that sometimes we get so caught up in it that we forget that we are spending money. One still has to keep a strict budget, IMO, and not let rewards influence anything. For some, it's easier to just pay bills directly from bank account instead of collecting a bit of rewards. Others want every penny they can get and pay it off every month and don't feel overwhelmed. It's a matter of perspective but I think your point is a great one.

I used to pay for EVERYTHING with debit. I don't anymore, primarily because CCs offer rewards and better protection. Having said that, I will readily admit it is more difficult to keep on top of your spending when it's spread across several CCs. You just don't "feel" the impact as much or as quickly. For that reason I think everyone just has to be careful and track their spending, or else the rewards are useless and wiped out with interest

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Vattené
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Re: Advice on rewards cards?

Postby Vattené » Fri Feb 05, 2016 2:42 pm

Brad Bishop wrote:I used to pay all of the bills that I could with a credit card (not carrying a balance) mainly so that I could:
1) Simplify my life - not have to pay each little bill
2) get some kind of cash-back on it.

The only rule I had was not to pay a fee to do this.

I stopped doing it a few years back because I noticed that these bills became invisible to me. If the cable bill and the mobile phone bill and the whatever bill are all hitting your credit card and you're just paying it then you stop having a sense of what you're actually paying out. You're just paying the huge bill each month and going on your way.

Now I specifically pay each bill via my bank's online bill pay so that I know:
1) my mobile phone bill is $85/mo
2) my cable bill is $60/mo
3) my electric bill, while it fluctuates throughout the year, remains in the ballpark of what I expect.

For me, it just gave me a better handle on what I was spending to specifically pay each bill every month. I do the same thing with paying cash most of the time. It gives me the sense of what is actually going out the door instead of just everything accumulating and having that big bill.


kdm31091 wrote:I do think you raise a great point. One has to be really careful with credit card spending in general, but especially paying bills IMO, because it can dilute the "feeling" of spending.

If you are really disciplined every single month maybe it's not an issue. But I understand about the "big bill at the end of the month" being kind of more stressful vs just the money coming straight out of your bank as you go. You can avoid the big bill by simply making multiple CC payments per month but some people don't feel the rewards are worth doing all that.

I think the main thing to remember with credit cards and rewards is that sometimes we get so caught up in it that we forget that we are spending money. One still has to keep a strict budget, IMO, and not let rewards influence anything. For some, it's easier to just pay bills directly from bank account instead of collecting a bit of rewards. Others want every penny they can get and pay it off every month and don't feel overwhelmed. It's a matter of perspective but I think your point is a great one.

I used to pay for EVERYTHING with debit. I don't anymore, primarily because CCs offer rewards and better protection. Having said that, I will readily admit it is more difficult to keep on top of your spending when it's spread across several CCs. You just don't "feel" the impact as much or as quickly. For that reason I think everyone just has to be careful and track their spending, or else the rewards are useless and wiped out with interest


That is a good point, but personally I am the exact opposite. I keep on top of everything I have outstanding across my cards, but it used to be I didn't with my checking account (I do now partly because I have budgets and projections, but it's not how I used to be).

I also used debit for everything by default. It was more convenient than cash or checks, and I didn't know of the protections and benefits of credit cards. I didn't really keep track of my spending. I kept plenty in my checking account and when I wanted to buy something (or when a bill came out of checking automatically) I knew I had enough in the bank to cover it and just didn't really think of it much beyond that. Even though the money was coming out of my pocket in real time I didn't really feel it. I started using credit cards for the rewards, but as I got into it I made sure to stay on top of my spending because I wanted to be careful not to get in over my head. I use credit for everything now, but I keep running tabs on specifically what I owe on every one of my cards. I feel it a lot more this way - even with automatic bills - because I have to add it to what I have outstanding and be aware if what I owe. The rewards are great, but as far as keeping on top of my spending this actually works better for me personally.

Different methods work for different people; the important thing is being on top of your finances and not letting rewards drive spending. If using a checking account works better for someone, I think it's worth the sacrifice in rewards.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now



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