I mean… It’s pretty simple really: charge everything.
I don’t understand why people aren’t already doing this, but according to a new Bankrate survey more than half of Americans pay for things like groceries and restaurants with debit cards.
Is the issue a worry about a huge bill? About rampant spending?
Then do what I do and transfer money out of your bank account each time you charge something to the card. This helps avoid a big bill because either you’ll have all of the money there when the bill comes due or you can follow my lead and make weekly payments to the card to keep the balance down.
Of course, there are other ways to maximize rewards. I know a lot of PF bloggers advocate maxing out the Chase Freedom quarterly gas station or grocery categories by buying gift cards for other stores at the establishments in question.
This seems to work well for them, but it makes me nervous. First of all, I don’t love having a ton of gift cards. It feels like it’s money that could be put to better use. More importantly, I’m afraid I’ll forget or lose them.
Also, I get the impression that credit card companies are being ever more vigilant about “manufactured spending” as they call this type of practice. I know that card companies can void your sign-up bonus — or simply refuse to count the spending toward the bonus’s threshold. A lot of people spend exactly enough to meet the minimum — and that includes buying gift cards. So if the card company refuses to count GCs, folks could fall short of the threshold and miss out on the bonus.
For those reasons, I avoid this method, and it of course makes me reluctant to advise people to try it.
Still, there are plenty of bloggers out there who routinely get the full $75 in bonuses (Chase Freedom offers 5% on up to $1,500 of purchases, I believe) each quarter. Or get rewards card sign-up bonuses using that method. So do with that information what you will. It’s just not for me personally.
I guess I just don’t see the point because even frugal folks could usually meet the spending minimums for sign-up bonuses with their regular expenses.
After all, many rewards cards’ sign-up bonuses require $3,000 to $5,000 of spending. That means you just have to charge $1,000 – $1,666 a month. That may sound like a lot, but not when you’re charging every single purchase.
Obviously, I’m not the most frugal person in the world. But even with a bare bones budget I estimate that I’d spend around $1,000 a month on my card via my various day-to-day purchases: groceries, drugstore, gas, etc. Plus I pay my $400 insurance premium, and there’s usually at least $200 of unexpected expenses that can’t be covered from day-to-day funds.
I’m sure if most people added up their general expenses — that is, anything and everything that could go on a card — they’d find they spend plenty to meet those thresholds.
And of course, it’s not just about sign-up bonuses. When I’m not card-churning, I love my Citi Double Cash Card. That provides 1% when you charge something and 1% when you pay it off.
Two percent on all purchases adds up quickly, I assure you. So why would I miss out on that by paying with a debit card if I can ever help it?
And usually (perhaps unfortunately?) I tend to spend more than the amounts I mentioned earlier. There are home repairs, unexpected medical expenses, travel, etc.
Granted, those are things that most people put on credit cards anyway, but the shame of it is that not everyone has a rewards card. Which means they’re missing out on a lot of bonuses by just using a plain old credit card.
So I guess my point is: If you’re not already using a rewards card, go get one now! And then charge everything!
How do you maximize credit card rewards?