What is the best uses for a credit card?

[Alec McGinn]

Currently, I have one credit card and pay the balance off every month. How do you all use credit cards as a tool? Let me know your thoughts!

[Mark S.]

I only use debit cards to obtain the necessary “swipes” to qualify for a couple of high yield checking accounts.  One pays 3.00% APY up to $10K, the other pays 5.09% APY up to $10K (used to be 4.59% APY up to $20K).  

One of my credit cards is a cash back card for the 5.09% APY high yield account.  It requires minimum $1K/month spend.  It offers 3% on groceries and convenience stores, 2% on gas, 1% on everything else.  I use it almost exclusively for groceries, gas, and recurring monthly bills.  I couple this with the Chase Freedom card which I primarily only use for the quarterly rotating 5% categories.  I am currently considering applying for a Southwest credit card as they’re offering a 60,000 point bonus.  Reading through the restrictions, it seems like they’re starting to crack down on “travel rewards hacking,” so not sure if I can combine with the business card to get the companion pass more easily or if I’ll have to “earn” the 50,000 point difference within the year.  If that’s my goal, I will likely change my current strategy.  I can still get at least 3.09% APY on that 5.09% APY account without using their credit card.  Anyone else considering the Southwest card for the 60,000 bonus?

[Jer Yeung]

The companion pass should still be available primarily through the credit card bonuses.  Now is the time to do that - get the bonuses to hit your account in 2019 get the companion pass for 2019 & 2020!

[Mindy Jensen]

Originally posted by @Russell Brazil:

...So who cares if your credit score is 800 instead of 805.

I care! I'm trying so hard to get to 850! The elusive perfection... 

[JD Martin]

Thoughts (and what I do):

1. I pay for everything that I would normally pay for anyway with a cash back credit card. I don't want travel miles or anything like that, I want cash. Amex at grocery stores for 6% cash back & gas stations 3% cash back, Citi Visa 2% cash back on everything else. Anything that can go on autopay on the CC goes there, like the cell phone bill. Pay the bill in full each month.

2. In the 15 years or so I've been doing cash back, I estimate I've made about $15k cash back. More in years when I'm rehabbing a house. Not going to retire on it but nothing to sneeze at, either. Never paid 5 cents in interest, which has actually led two of the cash back cards I had to have to be cancelled since they essentially took away the cash back (probably because I wasn't a very desirable customer). 

3. I look at the cash back as "getting my money back" from the years when I was a young, poor slob and had to pay interest when something major happened and I didn't have the cash to cover it. So every time I see cash back on my account, I say "I'm gettin' my money back". 

4. Using a CC for everything allows me to track expenses easily. It also simplifies life in that I don't have to worry about carrying large amounts of cash, going to the bank to get more, or pay on a number of different things (i.e. cable bill, cell phone bill, etc). 

5. I would never use a debit card. Why give potential thieves access to *your* money? Let them have access to American Express' money. I had to cancel my existing AMEX yesterday and get a new card because someone got the number and charged $200 to "Twitter advertising services". If that had been a debit card, they'd have access to MY money until I got it figured out. Until my bank forced my ATM to be a Visa ATM, I always just had a non-branded ATM that was only good at the bank. 

6. Not using credit cards doesn't protect you from fraud. In fact, if you're not diligent about knowing what cards you do and don't have, and when & how often your credit is pulled and updated, you could have fraudulent credit cards tied to your credit report that you don't even know - and there's a time limit on filing for fraud. I suppose the right attorney could get that part figured out, but to me better to just utilize credit that you know, and access your reports regularly to verify what is what.

[JD Martin]

Originally posted by @Jer Yeung:

Originally posted by @Steve Vaughan:

Originally posted by @Jay Hinrichs:

 just curious how do you rent a car without a major credit card.. and a lot of other things require it like checking into a motel etc. 

as a road warrior I cant fathom how I could operate without a card.. ?

 We secure rental cars and motels when we travel with our debit cards without a hitch.  When they ask for our credit card number, we put in or provide the debit card number.  No problem!

One thing to be wary of is the hold that they put on your debit card, and the sheer risk of having your debit card information out there.  I didn't see it mentioned, but card fraud happens... if your credit card is hacked, most card companies have some sort of fraud protection where you're not responsible for fraudulent charges, and they will remove the charges from your card while they research it.  However... if this happens on a debit card, they hold your money while they research the fraud.

Basically... if something happens to a credit card, it's the bank's money at risk.  If something happens to your debit card, it's YOUR money at risk...

If you can manage your spending and pay it off every month, using a credit card to get back some sort of return on something you would otherwise be buying (whether cash back, points, miles, etc), there is no reason not to realize that return and reduce your risk of getting your card information stolen.

 I had this happen to me once years ago. A satellite dish company drew several hundred dollars out of my account unauthorized. I eventually got the money back but not before several checks bounced (I was a lot poorer back then!). I got reimbursed by my bank but not by the companies that charged me the bounced check fees. And the whole investigation and return of my money took months. 

[Hai Loc]

I bought my first 3 properties with credit card checks.. That is the best use

[Deep Shrestha]

@Alec McGinn I use my credit cards to earn cashback. I used Bank of America CC because it gave me 3% on gas until Citi Costco came with 4%. Another benefit of Citi Costco is additional 2 year warranty on electronics and appliances.

I do have Citi master card for 2% cash back on everything.

Discover for quarterly 5% Cash back

Amex for specific benefits and 3% cash back in departmental stores and a few other cards depending on their benefits. Using cash back cards helps me get a few hundred dollars every years for the expenses I was going to pay anyway. 

I would emphasize on paying off the balance ASAP because I realized that zero balance helped my credit more compared to low balance. 

I see people recommend using cash or debit to prevent overspending. I would rather have cash back and spend that free money. Also, you control your spending, rest is just excuses.

[Matt Millard]

Cash back & 0% financing offers have helped me in real estate & more! I really benefit from the sign up bonuses too! Goal next couple years is to start travel hacking!

[John Morgan]

@Alec McGinn I use them to my advantage and have an 800 credit score which seems to keep lenders happy. I pay off my balance every month and enjoy the 2% cash back or hotel points for free travel. I just opened a new account that gives me up to 15k balance with zero interest for a year. I’m doing a rehab and might need to carry a balance for a few months until I get it my cash reserves up. It’s free loans basically if you use them right. And they pay you to use them! A win win.