For the most part, we all have and use credit cards – they are yet another means by which we consume the world around us. But do we use them for our own benefit or to the benefit of our creditors? Talking with family and friends, I am absolutely shocked at how many successful people simply use debit cards for everything or pay outrageous interest on revolving credit card debt. I cannot stress enough the benefits of treating consumption as an investment; there are lucrative opportunities around every corner screaming for your attention – it’s up to you to research, investigate, and capitalize on them to maximize your profit potential.
While credit card companies offer opportunities for people with almost any credit rating, their best deals (most importantly ones where you can gain financially) come with good to excellent credit. I’m currently writing another article to supplement this one on improving your credit score; suffice it to say it is a solid investment that will yield dividends far beyond what you may have imagined at first. Once you are able to maintain a strong credit rating, the opportunities are endless.
So let’s say you’re over the credit rating hurdle. What now? It’s time to capitalize on your creditworthiness! Here are some of the things I’ve done, and believe me when I tell you this is just the tip of the iceberg.
- Consolidate credit card debt and/or stop paying interest. Did you go on vacation and run up a charge card a little too high for the month and don’t want to pay in full? Are you carrying revolving credit card debt at a high interest rate? Apply for the Chase Slate – this credit card allows you to make 100% free balance transfers and float the debt for up to 15 months at 0% APR. Typically credit cards will charge a 3% balance transfer fee; with the Chase Slate there is no fee for the first 60 days! Transfer your balances from any credit cards you have within 60 days of opening your Chase Slate account and make sure you pay the minimum payment over the 15-month 0% APR period and pay off the balance in full before expiration of the 0% APR period. My wife and I went on vacation and ran up close to $5,700 of charges on our American Express Premier Rewards Gold. I applied for the Chase Slate, was approved, transferred the entire balance over, and paid a minimum payment for the next 14 months before paying off the remainder of the balance in the final month. I neither accrued nor paid any fees or interest during this entire period of time! If your credit is stretched thin and you are not approved for the credit limit you need on your Chase Slate there may be a solution as well. In most circumstances you can transfer credit between cards you have at the same bank or issuer. For example if you are approved for a Chase Slate with a limit of $5,000, already have a Chase Sapphire Preferred with a limit of $10,000, and you need to balance transfer $10,000 to the Chase Slate, you can ask Chase to transfer $5,000 of your credit limit from your Chase Sapphire Preferred to your Chase Slate, free of charge. In their eyes they are not changing how much total credit they have extended you based on your creditworthiness.
- Take advantage of rewards offers – they’re very real and it’s a mistake to pass them up! I recently acquired the Citi Thank You Premier – spent $3,000 in 3 months, and they gave me 50,000 Thank You points. If you’re having trouble spending $3,000 in 3 months – think about everything you actually pay for – you’d be surprised what you can pay for with a credit card (almost all of your non-debt bills and so much more). From the charges I had, I had earned approximately an additional 5,000 points (3x points/dollar on travel, 2x points/dollar on dining/entertainment). With these 55,000 points – I could have purchased up to $687.50 in airfare (you can typically buy 2x domestic round trip tickets in the US for this amount, or get close). But instead, I redeemed the 55,000 points for $550 in gift cards to the Marshall’s / TJ Maxx / Home Goods trifecta – my wife’s favorite stores. This was part of her anniversary gift – not only was she ecstatic about it but it was effectively free money which turned into 3 pairs of designer shoes, a designer purse, and 10 pairs of clothes. Oh and she bought me a couple of polo shirts too.
- Take advantage of perks or benefits. Again, this is very important – you have everything to gain and nothing to lose! Read through all of the perks and benefits that come with your credit card thoroughly and see how you can apply them to your financial situation. I bought an iMac from the Apple store some years ago. They offered me the AppleCare protection plan for a couple hundred bucks more, which I refused. Why did I refuse? I used my American Express Premier Rewards Gold to pay for the purchase. One of the key perks of this card (and many other cards these days) is that they extend a manufacturer’s warranty (as long as it is 5 years or less) for an item you purchase with the card by an additional year. So when my iMac broke down 1.5 years later and I was out of my 1-year manufacturer warranty from Apple – I called American Express and they paid for the repairs. It was an easy process too – I took the iMac to the Apple Store, got a quote for the repair (the video card needed to be replaced for approximately $450.00), sent it to American Express, and then paid for it with my card. A short while later, the charge was cleared from my balance as the warranty benefit kicked in.
- If you’re going to use a traditional revolving credit card, choose the right one to fit your lifestyle. The recently introduced Citi DoubleCash is just amazing for us. We pay for everything with that card outside of taking advantage of promotions/benefits like above and our mortgage/car loan payments. You get 1% cash back when you buy something, 1% cash back when you pay your bill for the same with no caps or categories, and 0% APR for 15 months. This is just downright amazing – we have earned over a thousand dollars in cash back this year alone from paying bills, buying gas and groceries, eating out, etc. Again, if you’re thinking “Oh I’d never spend a lot of money on a credit card…” just think about what you can pay with a credit card. We pay our residential HOA fees, car insurance premium, electric/water/gas/internet/TV/cellphone bills, and so much more with this card. Sometimes there is a nominal fee (for us it is only the electric company), but most of the time there is not. When I think about it, the nominal fee usually makes sense. My electric bill in July 2015 was over $400 (yes, we live in Texas where the summer months A/C usage is intense). Paying with my DoubleCash, I was charged a transaction fee of $3.95. But with my cash back, I earned $8.00 on that transaction, so the fee was irrelevant.
If you’re really thinking outside the box – you can create scenarios which combine credit card deals together for even greater benefit. Let’s say I applied for a Citi DoubleCash and was approved for a $15,000 limit. With the $15,000, I could go ahead and buy all the electronics and furniture for the media room we’ve been planning in our house and get it all installed (or whatever else you need to buy). I could then collect $150 (1% cash back when you use your card), and carry the remainder of my balance for the 15 month 0% APR period without accruing or paying interest. Any minimum payments I make would be credited to the principal. Just before the expiration of my 15 month 0% APR period, I would apply for the Chase Slate and transfer my entire remaining balance over for free, meanwhile pocketing another $150 from Citi (1% cash back when you pay). I could then carry the remaining balance for another 15 months at 0% APR making only the minimum monthly payments credited to principal and once again not accruing or paying interest before paying my balance off in full two and a half years after actually spending the money on my media room! Why wouldn’t anyone take a free $15,000 loan for 30 months and pocket $300 in cash back, all the while being required only to make a relatively negligible monthly minimum payment which goes directly to reduce your principal balance anyway?
These are just some of the choices you have with good to excellent credit. Remember, it’s important to treat credit card consumption as an investment and maximize your net gain. Leverage your good credit to seize opportunities for profit and nullify losses. With each victory, build your confidence and take another bite at the apple. While credit card companies profit from merchant transaction fees, they also profit tremendously from the interest you pay if you let them. And it’s not like you’re hurting the credit card companies if you don’t pay interest; they benefit significantly simply from your use of their cards. If you have the credit and income to support your spending habits, they love being the medium through which you consume the world and the better off your credit and income are (less risk for them), the more they will give you (higher credit limits, better benefits, etc.). Most estimates in the United States put the average revolving credit card debt for indebted households at over $15,000 as of 2015. This is staggering as most folks accrue and pay interest at around 15% APR with many well above that number on these balances they carry from month to month. In the latest Federal Reserve statistical release dated August 7, 2015, the total outstanding revolving debt (which accrues interest) as of June 2015 stands at a mind-boggling $906,524,500,000 (or $906.5 billion). Food for thought – how much of this could we wipe out if people made smarter decisions on their credit card consumption?
Disclaimer: The editorial content presented here is not provided or commissioned by any bank or credit card issuer mentioned herein. Opinions expressed here are the author’s alone, not those of any bank or credit card issuer mentioned herein, and have not been reviewed, approved, or endorsed by any bank or credit card issuer mentioned herein.