These People Pay For Everything With Credit To Reap Rewards: You Should Too
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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While most finance experts warn people to limit their credit card usage, there are some instances where paying with your credit card primarily is ideal, if you are responsible with paying them off.
Rewards-earning credit cards offer their members everything from airline miles to discounts on goods and services to cash back, incentivizing their use.
GOBankingRates spoke to people who pay for as many of their expenses as possible with their credit cards up front to reap the most rewards, but they also pay them down as quickly as possible. Here are some of the benefits of this approach.
Get Travel Points and Perks
Brodi Cole, the owner of the family travel site Our Offbeat Life, has been traveling full time with her family as “digital nomads” since 2019.
“My husband and I primarily earn points with Southwest Airlines, which offers great flexibility for flights and hotels almost anywhere in the world. It also offers zero international transaction fees.”
Her points don’t expire and blackout dates are minimal, she explained.
“On average, I spend around $2,000 to $3,000 per month on the card, but this reflects my budget and income, and it’s not a one-size-fits-all recommendation.”
She also pays her balance in full every month, and sometimes more frequently for larger purchases.
She recommended some tips:
- Start small: Begin with a card that has lower spending requirements and rewards that align with your lifestyle. Maybe you travel less and prefer cash back instead of points. Do your research.
- Be budget-savvy: Be responsible in your spending. Only use the card for what you can comfortably afford and track your expenses carefully using budgeting tools or apps.
- Avoid the debt trap: Overspending is a slippery slope. Remember, rewards are only valuable if you use them responsibly and don’t fall into debt. Otherwise, you’re losing more in paying interest than the rewards are actually worth.
Benefit Your Business
According to Mark McCalla, owner of Alpine Dog Co, “[L]everaging rewards credit cards for all possible expenses has been a game-changer, allowing me to maximize returns on every dollar spent.”
He channels about $10,000 through his rewards credit cards each month, covering everything from “raw materials and inventory purchases to travel and everyday expenses.”
He said this strategy not only simplifies his financial management but also earns him substantial rewards, ranging from cash back to travel points, which has been instrumental in reducing business costs and funding personal vacations.
For McCalla, integrating rewards credit cards into his personal and business financial strategies has provided him with “tangible financial benefits and introduced a level of efficiency and simplicity into my financial management practices.”
Choose the Right Cards
McCalla’s top tip for getting the most out of your rewards cards is to choose cards that align with your spending patterns and offer the most lucrative returns for your lifestyle or business needs.
“Additionally, keeping an eye on special offers and bonus categories can significantly boost your rewards earnings,” he said.
Also, choose a card where you know you’ll actually use the rewards and which will get you the maximum benefit, said Lionel Pinkhard, general manager at Infinity Curve, a real estate marketing firm.
“A person that never leaves their hometown probably doesn’t need a travel card, but a cash-back card could be valuable, or one that offers free movies.”
Many cards have monthly earning limits, often equal to the credit limit, so there’s no point in paying the card off multiple times in a month, Pinkhard added.
“Once you reach the limit, switch to a different card.”
Loyalty Brings Greater Rewards
Pinkhard also uses his credit cards for travel, using the same airline to reap extra rewards.
“Usually, I put around $10,000 per month on my primary card (Visa) that rewards Emirates Skywards miles. I settle the bill in full each month, so as not to incur interest,” he said.
His card has a booster option that increases rewards at a small monthly fee.
“Mostly, I use this card to upgrade flights on Emirates or partner airlines. An additional benefit is that it gives me lounge access all over the world and a few chauffeur drives each year,” Pinkhard said. “If you fly frequently, get a travel card. If most of these flights are on the same airline, get a co-branded card for greater earn.”
Pay It Off Monthly
To maximize benefits and maintain a stellar credit score, McCalla said he adheres to a strict policy of paying off the balance in full each month.
“This discipline ensures I enjoy the rewards without incurring interest charges, turning potential liabilities into assets.”
Go For Cash-Back
If you’re not sure what kind of rewards card is right for you, Jim Wang, founder of Wallet Hacks, suggested the Fidelity Rewards credit card.
“It gives you 2% cash back on everything without an annual fee. No need to think, just get 2% back on everything.”
He and his wife carry two cards, the Chase Sapphire Preferred Card and a Southwest Rapid Rewards card, and try to pay for everything with them — things ranging from gasoline to their kids’ summer camps and all their travel.
“I think the key to earning rewards is getting cards that match your spending patterns, which you can quickly see through your budget. If you use a budgeting tool, you can see the categories you’re spending the most on.”
If you are confident you can pay your credit cards down each month, try paying upfront for bills and basic expenses, to get these benefits.
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