Guess what happens when we get questions from readers? We answer them! So if you have your own question, click here and shoot it off to us. We’ll do our best to get back to you and give you an answer that isn’t totally incorrect.
Depending on who you ask, credit cards are considered either a good thing or the devil reincarnate. Johnny and me, well, we think they’re a-okay — with a few stipulations. First, pay them off in full each month. Second, milk the heck out of your reward points. Third, do not change your spending habits now that you have a shiny plastic card and the lure of “free” rewards. Johnny and I go through stages of putting all of a certain kind of expense on one credit card, depending on the kinds of rewards we’re gunning for. I just got a airline rewards card, and we got 50,000 points (over two round-trip flights) by spending a certain amount in a three-month period. And we just got a new AmEx card that will give us $300 if we spend $1000 in the first three months. That same card will give us 5% cash back if we put our telecom bills on it, so we’ll be using it for that, too. It’s a take, take, take relationship. We refuse to give anything back to any of those credit card companies.
We recently got a great question from an OFB friend and reader who wonders where to draw the line with accruing reward points:
Hi! Long-time listener, first-time caller…
Anywho, I wanted to bounce something off you. Is it wise to start paying my regular bills on a credit card (then paying back immediately, as I know I have that money budgeted?) to accrue the rewards points? This sort of seems no brainier but idk if I’m not aware of an issue.
And here’s our response:
Thanks for the message! Johnny and I are all for accruing reward points on our credit cards! And paying regular bills on your credit card should’t be a problem if you pay your card off in full every month. That said, there is one caveat. Some bills will charge a credit card fee of 3 to 5 percent. In almost every case, it’s not worth paying a fee just so you can get credit card points. That’s just the kind of trap credit card companies want to get you to believe — that spending more on their cards is worth the rewards. So if your bills don’t have a credit card fee, go for it! Otherwise, we don’t recommend it.
Hope that helps!
So what we’d like to know from you is 1) Whether you use credit cards, 2) What you pay for with said credit cards, and 3) What kind of rewards you accrue. Basically, where do you draw the line with your credit card use?