A former Federal Reserve employee has a little secret to share: she loves credit cards. Find out which ones she uses and why (and how they earn her family a nice chunk of money each year).
With this article I might reach the pinnacle of Internet oversharing: I am about to open my wallet and let you, Internet People, have a peak at the goods.
I was at lunch with my boss one day, and I opened my wallet to pay (to be reimbursed by the company later of course!). She stared–gaped really–at the contents.
“I’m not sure you should be championing financial literacy, Amanda. Is there something you need to tell me?” she said.
She was referring to my fist full of credit cards, which any good financial literacy guru knows is a gateway to debt, losing your home, the demise of your marriage, and dying a slob who no one loves.
However, this girl loooooves credit cards. Today I am taking you on a tour of my wallet. There is very little cash to be found, a few gift cards and maybe a stray deposit slip. Oh, and cards. Lots and lots of cards. I did get a new credit card at Marketreview.com, that has low interest rates. Before we dive in, I should say that many financial experts believe that people get into problems because credit cards seem like fake money. These experts encourage users to cut up their cards and only use cash. But to me the opposite is true. Cash has always seemed like Monopoly money to me. When I pay with cash, the transaction is done and forgotten. When I spend on a credit card it feels more real to me. I know I will have to see the charge again when I get my statement. And I always, no matter what, at the end of every month pay off every card in full.
I like credit cards for three reasons:
- They make paying for stuff so much easier. Cash is a precious commodity in my household, rarely procured by driving all the way to the bank. Usually I have it because I have sold something on craigslist. Then I hoard the cash for my next Craigslist or babysitting transaction.
- One word: float. I love to be able to buy all the things our family needs and only worry about the balance in my checking account the day before the bill is paid. Being a small business owner with a variable income, this is extremely helpful. I can’t say it enough though; make sure you do pay it in full every time!
- This is the one that really gets me: incentives. The bonuses on all my credit cards add up to hundreds (yes, hundreds!) of dollars every year.
Oh, and one more thing. Financial experts tell you not to fall for the store credit card offer because all the outstanding credit can wreck your credit score. I’ve been using these cards for years. They have never encouraged me to overspend. And I have an excellent credit score.
Ok, let’s open that wallet, shall we?
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This is my oldest and most frequently used credit card. I opened it in college when I started saving for my future kids’ college educations (I’m an even bigger nerd than you thought, huh?). We use it for groceries, utilities, miscellaneous purchases, and especially any large purchases. One percent of all our spending goes into our kids’ 529 account, along with little extra bonuses depending on the retailer. Using this card put about $200 into our little angels’ college fund last year.
American Express Costco Card
This is the other workhorse of the Gibson household. I originally got it just so I could charge at Costco, but we also use it for restaurants, gas, and travel because those purchases earn greater than one percent cash back. Last year our cash back bonus was around $100.
Visa Check Card
This strange creature came with my checking account and looks like a credit card, but I think it is a debit card. I don’t trust debit cards. Why would I want to use what is effectively a credit card that doesn’t offer me the advantages of float or incentives? I think I accidentally used it once and I was charged a fee (hisssssss). This one only sees the light of day for my annual trip to the ATM.
American Express Business
We use this credit card for all business purposes. I like to redeem the points for gift cards that I then use for groceries. I’m just spontaneous and exciting like that. I think I got $100 in gift cards last year.
Visa Business Check Card
Can you believe there are two of these what-the-heck-do-I-do-with-it cards in my wallet? I only use this one on the very rare occasion that I need cash from our business checking account.
I don’t shop at Target often, but when I do, this bad boy gives me five percent off all my purchases. Because it’s essentially taking off the sales tax, it’s like living in some beautiful libertarian dream world. Last year this card saved me $95.
Lowes offers the same deal as Target: five percent off every purchase. This shiny blue card saved me $38 last year.
Home Depot Card
If you pay with your Home Depot card, but you also have a Lowes card, Home Depot will also give you five percent off because they price match. I like having both because I tend to shop at both stores. And now the lovely folks at Home Depot have taken to sending me 10% off coupons. Not counting the coupons, this card saved us $22 last year.
Nordstrom Visa Card
I opened this card last year because it had been 10 years since we had purchased any church clothes for my husband. He is now so fly those church ladies swoon. And the incredibly complicated Nordstrom Card points system resulted in a $250 gift card for us to use at our leisure.
Victoria’s Secret Angel Card
Last, and probably least (used) is my Angel Card. I charge maybe $10 in total per year on this card, but somehow they send me, like, 10 coupons for free underwear. At $8 per pair on average that is an $80 value per year. P.S. Please don’t tell Victoria her people have no math skills.
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When the oversharing gets to my underwear drawer it is time to wrap it up. In conclusion, take advantage of the deals, don’t get suckered into spending more than you should, and pay it off in full each month. Credit cards made our family $885 richer last year alone. Added bonus: when I get bored I have enough pretty plastic cards to start up a game of gin rummy.
Now your turn. Do you have even more credit cards? Do you have one credit card you only use once a year like my mom? Do you know what the heck a debit card is for?
Photo by: Sean MacEntee