When Cash Back Is Cash Back

“Spend $1,000 for the first three months and you will get $100 cash back.”

This is just one of credit card promos that I get almost everyday. It usually ends up in the shredder. I am not about to put myself into debt just to get $100 cash back. A small cash back is not enough to convince me to go on a shopping spree. 

It is stupid.

That was my rhetoric until our favorite warehouse company decided to drop our current credit provider and contracted another one. We had no choice but to go along with the changes to keep the cash back that we have accumulated with the previous card.

Problem is, we really like doing business with our old credit company. When someone stole our card information and used it to pay for bills, they stopped it right away and gave our money back without a hassle. When we call, they do not put us on hold for a long time. That is a big deal for us.

To be able to continue doing business with them is to open a new credit card that we do not need. 

Then an idea came when we received a bill for our car insurance, then my health insurance, then the utility bills, then…

I did not wait for another second. I filled out application for the new credit card. Because we were old customer, the application was approved right away. When I received the card, I put all the bills that were due for that month.

I got the $100 cash back without adding any expenses. We pay all those bills regularly anyway, why not get cash back from it, right?

The secret is to pay all the credit card balance on or before the due date to get the cash back. If you don’t, it will just go to the interest payment.

Watch Your Score

In my previous article, I mentioned how maintaining good credit standing benefited us. It takes discipline and determination before anyone would be able to establish good credit history. I cannot speak for other people but I can share how we did it. 

First, we only maintain three credit cards from major financial institutions. We have one Visa, one Mastercard, and one American Express. We turned down hundreds of credit card offers. Applying to every credit card offer would lower your credit score.

Second, we do not use our credit cards at the same time. We also make sure that when we do use them, the whole amount will be paid off when the bill comes. In that way, we will not worry about late payment. It is another factor that affects credit standing.

Third, we designated one card to use for our regular shopping. It makes it easy for us to monitor our spending. This is the card that gives us cash back for every purchase we make. It is tied up with Costco so we do not have to pay the credit card's annual fee. 

Every year, we receive two cash back checks; one from the credit card company and one from Costco. The amount in those checks covers our Costco membership fee. 

Fourth, we use the other two credit cards just enough to keep them active and in good standing. Two to three times a year would be enough.

Fifth, we only use 10 to 20 percent of our credit limit. It sends a bad signal to the creditor when your balance is more than 50 percent of your credit limit.

The last point is a bonus point. My husband and I competes on who gets the highest credit score. Our finances are consolidated so it is always a tie. 

Yes, it is important that you and your spouse are in the same page. A family that creates good credit together saves together.