I think, by now, we all agree:
Credit Cards = BAD
I mean, that’s pretty much Personal Finance Kindergarten, right?
Why pay 19%+ interest for something that just goes down in value (like that 3D TV)?
But, why do I pay all my bills – both work and personal – by credit card.
I’m sure the answer’s pretty obvious to all and sundry: it’s for the points, man!
Yes, even millionaires like to get free stuff …
…. and, Sugardaddy outlines on NetworthIQ exactly how he does it:
1) Assuming that you pay your bills on time, most of the time, put all routine expenses on your credit card…utilities, groceries, etc.
2) Set up an automatic bill payment plan from your checking account for the card online.
Result:
1) you get a 30-day free loan.
2) you get free credit card points that are worth real money.
3) you increase your credit score.
4) you consolidate all your bills in one payment
5) You will never have a late fee and the APR will never concern you.
6) You will always watch your checking account balance like a hawk as failure to have enough in the account IS NOT AN OPTION.I have done this for 10 years and it works like a charm…I get all my video games for “free” from Best Buy, and beat the banks at their own game.
Life does not get any better than that.
But, there’s always a catch in Life, Sugardaddy 😉
The one, here, is that the credit card companies HOPE that you forget to pay your bill on time, then you get to pay interest from the date of purchase.
[AJC: actually, they’ve already made their $$$$ from the Merchant Fee – believe me, I understand this side of the business VERY well – but, that 19% they get from you is just sweeeetttttt]
So, I add a few more steps to this otherwise inspired plan:
7 ) See 6)
8 ) See 6)
9 ) See 6)
10) See 6)
Point made?
Great, because I, too, have been doing this for years.
My assistant puts all ‘work’ expenses through my personal credit card (needless to say I have a LARGE credit limit), and my wife does the same with our home expenses.
Both ensure payment in full each and EVERY month.
Having done that, later this year I’m traveling ’round the world first class [AJC: I’m told that First Class on the new A380 entitles me to my own/private room on the ‘plane!] … fully ‘paid’ by points.
Sweet 🙂
the interest charge doesn’t concern me, not compared to the other downside of using a credit card vs. cash — the “What is this ‘entertainment club’ charge on your card honey?” conversations. P.S. Adrian, do you need another assistant? I have a “business meeting” I would like to expense 😉
I agree with this. With interest rates where they are, the use of money benefit is non-existant at the moment, but the points (which I tend to spend on free upgrades when I fly) alone are worth it. Here in HK, using some credit cards can somethimes get you a discount (but usually on things which are seriously overpriced to begin with).
Auto-pay does the job for me as well. But I also negotiated a no-cost overdraft protection from my bank, so I don’t run the risk of bouncing a payment.
Credit cards = very good.
@ Ill Liquidity – MM301: Have MORE than one c/card … the one that your spouse sees and the ‘other one’ 😉
True, I always do this. Usually pocket the cash back but flying in the A380 Suites are always nice. I recently took the all business class flight from LAX to Singapore on Singapore Airlines and it was a very pleasant 18 hours. 95 seats and 15 crew on an A340, it was only 40% full and I was nearly alone in the back. It really felt like a private jet / being on Air Force One.
Highly recommended! And worth the 6K USD it cost my company to get me there 🙂
-Mike
This is exactly what i’ve been doing for a few years now Adrian and it works great. I have 3 credit cards and use them for usual monthly expenses such as gas fill ups, groceries, general household usage supplies, etc..
I spread these typical monthly purchases out over the 3 cards, so that the balances never exceed 7-10% of the card’s available balance, pay them off in full by the due date and ‘viola’, my credit score stays around 800, I get the convenience of their use and I stay consumer debt free AND get the points and perks, lol.
The average person does not seem to have the willpower. I’ve been doing the exact same thing and instead of Best Buy cards, it deposits directly into my Fidelity account.
http://investorjunkie.com/2509/fidelity-investment-rewards-visa-card-review/
@ InvestorJunkie:”spend more to invest more!” I feel an article coming on! 😉
Adrian, heh great point, I never thought CC that way but you are right!
All this talk about free points (being worth cash and such). I still don’t see how these free things will outweigh all that interest you pay (19% ) is just nuts. Only reason I can see to even have a credit card is for business(never personal) .This interest can at the very least, be partly deductible on your business expenses. Otherwise, I think credit cards are ridiculous.An expense unneeded.
AJC: You better not be using CC cuz you are hurting the poor by using them.
At least according to latest Fed report. I go into detail in my blog about it:
http://investorjunkie.com/2771/poor-transfer-wealth-to-the-rich-via-credit-cards/
Hogwash I say!
@ Investor – I think merchants/stores tend to absorb a lot of the 2% to 4% merchant fee (if my readers don’t know what that is, they should click your link NOW) because of (a) price competition, and (b) increased volume i.e. fewer suckers would buy if they had to rely on buying only what they could afford 😉
On the other hand, rich people can afford to pay cash, so why do they use credit cards? Only for convenience and flight rewards (everybody likes a ‘free’ upgrade … even the rich).
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