Cash Back Credit Card Strategies

I love credit cards. Especially cash back credit cards. Why? Credit card companies want the chance to earn interest off of you, and compete to provide the best rewards. And it’s been widely written that cash back credit cards give you the most value. I will show you how to use credit cards to your advantage in 3 easy steps.

Step #1: Choose the Right Cards

Credit card companies are constantly competing and your rewards may depend on your credit, so go to an online comparison website such as CreditCards.com (http://www.creditcards.com/cash-back.php) or CreditCardGuide.com (http://www.creditcardguide.com/cashback.html) to investigate your current options. Mark a date on your calendar to do an annual reevaluation.

Look for the following:

-Maximum % of cash back from the beginning (is it .25% until you spend $1500, then 1% thereafter?)

-No annual fees

-No cap on the annual cash back

-High enough monthly limit

Step #2: Organize the Cards to Maximize Benefits

Use different cards for different purchases. In other words, segregate your purchases according to how you can get the most cash back. For example, Discover has a cash back card that gives 5% on gas purchases, but shrinks down to less than 1% on most other purchases. Citi has a credit card that earns 5%, but is capped at $300 cash back per year. American Express gives you 5% cash back with no limit. So in this scenario, I use Discover for 5% back on gas, and American Express for 5% cash back (with no limit) on everything else, except when a vendor doesn’t take AmEx, and then I use Citi for 5% cash back ($300 annual cash back limit). In the beginning when this was all new, I would paste little notes on the back of my cards to remind me what card to use where.

Step #3: Use the Credit Cards like Cash

And this is the kicker…this is where YOU win instead of the credit card company. You use discipline and think of credit cards like an expense management system instead of “credit”. So you resolve to only make purchases for which you have…right now…the cash to cover. At the end of the month, you write a pay your balance IN FULL. You avoid interest. You avoid penalties. You win.

You win because:

**You get the cash back.

**You get a handy statement in the mail that itemizes your expenses. From this, it’s easy to examine your budget spending for ways to cut and call the credit card company if you’ve been erroneously charged.

**You get access to electronic downloadable spreadsheets off the internet for sorting and tax organization.

**You don’t pay interest or penalties.

**You continue to earn interest on your money in your bank account until you pay your bill once a month.

Thank you credit card companies!