Turning the Tables on Credit Cards

If you are like me, you've heard the warnings against using credit cards and paying high interest rates. So, rather than pay interest to the big companies, here are a few ways I use credit cards to get paid back.

I needed a game plan. First, I cancelled all of my unnecessary cards. Then, I called the companies of the cards I kept and had my credit limits lowered to only what I would need in the near future. Now I was more attractive to other lenders. (They look at your income, expenses, and the amount of credit that is already extended to you. Also, don't apply too often or for more than one or two cards at the same time.) My previous goal had been to pay off my card balance each month, so I was no longer paying interest on any of my cards. Next, I researched and applied for a card with a cash rebate program and one with a reward for the first card use as well as discounts at certain merchants that appealed to me.

The rewards of a particular card should fit your needs. Since I was not planning to carry a balance, APR comparisons were not a factor. Annual percentage rates should only matter to those who plan to carry a balance, which is not a good idea and not our goal here. And I don't have a new car or travel often, so I wasn't looking for something like the GM (TM) Card or one that awarded frequent flyer miles.

When my new credit cards arrived, I was ecstatic! I was planning to attend a baseball game where my rewarded card would get me 10% off in the stadium gift shop and a free t-shirt with the team logo just for using my card one time! The other card gave me 2% rebates for using it at their gas stations, which just also happen to have the lowest fuel prices in town. (A double savings is so attractive!) I could also use the card at other merchants and receive 1% rebates. I save money on my purchases and get gifts and cash in return. Great! I saved on my weekend vacation(gas and souvenirs)and my Christmas shopping(stadium store and everywhere else I shop)!

Through my experiences, I have found that it is best to reduce unnecessary available credit, but always plan to allow room for unexpected expenses. I have also learned that if you carry a balance, you will eat away at any rebate or reward the card use has earned you. Remember, the trick is to make the card work for you.

A recent example of making my card work doubly hard for me: I shop for items that I will get for free (or at a major discount) after rebate. Then I pay for those purchases with my card that earns me cash back. So, here I am with my free or dirt-cheap items, earning "interest," so to speak. I usually end up breaking even when I receive the store or manufacturer's rebate, except for tax, which the credit card rebate covers. Did I mention that I get to keep the free stuff?! I use these items personally, for gifts, and in my yard sales.

Another trick to the game is that you need to plan such purchases so that your rebate checks will arrive near the time your credit card payment is due. After all, we're trying to get ahead of the game, not stuck in a jam or shuffling debt from card to card, racking up fees for cash advances or balance transfers.

Also, a good idea for department store card users is to get the usual 10% off your first purchase (hopefully during a sale), then cancel your account. Only keep and use the card if it offers a reward or rebate program, and only then if you are a frequent shopper at that particular store. Otherwise, try for a card that offers a percentage back no matter where you shop, and use it at your local stores that accept offer the best prices. I frequently use coupons and competitors' ads at stores that honor them, and I pay for my purchases with the cash back card.

My goal (as your's should be) is to keep from ever paying card companies for borrowing their money on a monthly basis(interest, transaction, and misc. fees). Think of these purchases as mini loans. I know, the companies are in it for the money, too. But statistics show that the average teen already carries a balance of over $900 a month, and there are plenty of adults paying interest fees on even more debt. Our fair share is already covered, similar to using a coupon or a senior citizen discount when the person behind you has to pay full price. I believe those of us who need to stretch a buck should have the ways and the means. And I certainly hope these ideas can help.

Meredith Phillips is also known as Ms. Cheapskate. You can visit her web page at http://mscheapskate.homestead.com/MsCheapskate.html for the hottest time & money savers, home organizing & management, web bargains & freebies!

Take the Next Step

• Use a Credit Card Calculator to find out:
  The true cost of paying the minimum
  - What will it take to pay off my current balance?
  - Which is better: Cash Back or Low Interest Card?
  - Which is better: Airlines or Low Interest Card?
  - How much could I save by transferring my balances?

Do you have a time or money saving idea that wasn't included in this article? Please send it to tips @stretcher.com. We get the best ideas from our readers!

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