If you are not carrying any consumer debt on your credit cards, there are tons of ways to make them work for you other than by playing the credit card arbitrage game. Sure, you can take 0% interest “loans” from your cards, invest them in savings accounts, and make some extra money from them. And I am not saying it is a bad way to make money off your credit, but if you are not very good at keeping track of dates, transferring money back and forth and really staying on top of the game, it might not be for you. How else can you be sure to make the most out of your rewards program?
– For starters, make sure that whatever card you have gives you something in return for carrying it. Be it airline miles, cash back rewards, dividend points, hotel rooms, whatever…try not to carry a card that does not reward you for using it.
– Be sure to never carry a balance if you can manage it. If you are paying interest on the card, you are really in effect giving back any rewards that the card would give you, just in a different format.
– If you can swing it, pay for everything on that one credit card and don’t spread your charges out amongst a bunch of different cards. If you travel a lot and plan on doing more, you should be using your mileage card for every purchase you make, and then paying off the balance when the bill comes. (This is key, see above)
– Did you know you can pay most if not all of your household bills by credit card? Look into it, I am sure you will find that most places will take your credit card as a payment option, thus automatically billing you each month. Cable, Tivo, Netflix, Cellphones, etc etc all take credit cards as a billing option. You are paying them anyway each month, so why not have them all charged to the card each month? Think about it…say you pay $200 for some of your regular monthly bills. That’s $2400 a year that could be earning you points, miles, etc on whatever card you choose to use.
For us, we were using the Citibank Dividend card for a long time, earning a percentage back in cash every month for our every day purchases. Once we maxed those rewards out, we switched to our Citibank American Airlines card so we are now earning miles that we can redeem for free trips. I charge everything to that card, even if it is just a pack of gum at the store. Every little bit helps when it comes to getting rewards.
So make sure that once you are no longer carrying any credit card debt that you use your credit cards to your full advantage. Get yourself a card that rewards you how you want to be rewarded and use it for everything, paying off your bill each month in full as soon as you get it. If they are going to give you credit, you might as well use it and get something you really want!