Most people associate efficiency with only time management, but it can also be applied to your financial management as well. My family and I love to travel and one way I have found to help offset our travel costs is by using my credit cards in a smart manner. I am not talking about the usual topics you see out there of paying more than your minimum payment and never carrying a balance of more than 30% of your allowed limit. This is a whole separate realm of using your credit card to save you money. This is the realm of the “Air Mile Cards”! These days your points that you earn on these cards can be used for so much more than just free flights. You can pay for travel with points, get gifts cards to stores and restaurants, buy household products such as appliances, jewelry, the list goes on and on!
The most important thing to remember with this kind of strategy is that in order for it to save you money, you have to NEVER carry over a balance. You have to pay off your card EVERY month, otherwise the interest charges will far out way your benefits from the miles earned. Here is how you can rack up huge amount of air miles every month on stuff you buy anyways:
- Set up all your monthly payments to be directly charged to your credit card (cable bill, phone bill, insurance payment, ect). This is everything that you would normally write a check for or have directly withdrawn from your checking out. Note: Do not include any bills that charge an additional fee to charge it to your credit card. This fee would negate the benefit of the miles.
- Use your card when grocery shopping, putting gas in your car, eating out at restaurants, or any purchases that accepts credit cards at no additional fee.
The biggest risk that this method creates is that if you are not a careful spender you may find that you are over spending more than you can pay back at the end of the month. A great way to overcome this risk is to still keep a checkbook, but for your credit card purchases. Set your budget of what you can spend, and write down your charges just as you would do if you had written a check. Deduct these from what you have set aside in your actual checking account to cover these costs. This way at the end of the month you will have the cash to pay for what you have charged on your credit card. In addition, if you are holding your cash for the month in an interest bearing account, you have also earned interest on your cash while your expenses are sitting at the credit card company! A Win/Win situation for you!