I started getting involved in the using credit cards and perks about a year before my wife and I got married. I we both opened American airlines credit cards and we started charging our wedding expenses on them. The perk was 50,000 miles when I spent $3000 in the first 3 months. So, I booked our Honeymoon to Jamaica, and hit the $3000 limit in one go. I then used the points to book the tickets to fly to Jamaica and back (a long flight) for free.
Do you spend a total $1000 dollars on gas, groceries, makeup, toilet paper, etc. every three months? If yes do you want to make $100-$200 for doing nothing except swiping a card to pay for those things? If so then you will want to read this article.
This article will explain using your credit score to increase your buying power. Buying power is the ability to buy something. With more buying power, the more you can buy. If you get 5% cash back, that is the same thing as being able to buy 5% more. Think of it as giving yourself a 5% raise.
How do I do this?
It’s called the credit card game. There are three things most credit cards offer:
- A signing bonus;
- A percentage back per purchase;
- Perks, such as VIP to restaurants, clubs, priority boarding, etc.
What is the general objective of the credit card game?
Maximize the most out of all three categories without going into debt or hurting your credit.
The Three Ground Rules! Always remember:
- THE MOST IMPORTANT RULE is to make sure you do not spend more than you have.
- Don’t miss a payment.
- Always pay the statement balance at least every month.
This may seem easy, but if you play the credit card game effectively, you will have many credit cards open, possibly a hundred or more. Keeping track of the money coming in and going out is essential. Read the Review on Intuit’s Mint and other centralized financing programs, to learn how they can keep track of everything for you.
When playing the credit card game, it is all about keeping the mindset that you are making a percentage back. Do not think of the money you make as being “cash back” but instead you are making a return on investment(ROI). This being said…
THE SIGNING BONUS
Most credit cards give you a signing bonus, such as $100.00 when you spend $1,000.00 in the first three months, or 50,000 points when you spend $3,000.00 in the first three months.
First off, to get the bonus you must spend the required amount, then make the payment on the card. This means you must spend the full $1000 to get $100. Think of the $100 back as making a 10% return on investment.
The signing bonus is the largest amount of money made using your credit score but it is a one-time per card. So, the key is to keep opening cards. You may feel like this is bad advice, and it is if you can’t pay your bills. However, if you hit the bonus on one card, stop using it, pay it off and work on hitting the bonus on your next card, you have just increased your credit line without increasing your debt. YOU MUST NOT let the extra credit go to your head, REMEMBER THE THREE RULES ABOVE. Read If your credit score is over 700… for a detailed explanation of how multiple cards can increase your credit score.
Check out this The LIST of Credit cards that explains the ROI you can get. A lot of them are better than the stock market.
Percentage back per purchase
Credit cards have combinations of different percentage back perks. There are three main card types for percentage back.
- The store/airplane card;
- The rotating category card; and
- The set perk card.
The store card usually gives between 2-5% cash back at that specific store and 1% cash back everywhere else. The Target credit card gives 5% cash back on purchases at Target, where Walmart gives 3% for online purchases. The airplane cards usually give anywhere from 1 point for every $2 spent to 2 points for every $1 spent depending on the card.
The rotating category cards are from a variety of financial institutions. Every 3 months, there are rotating categories, usually three places or things that you will receive 5% cash back on, be it grocery stores, gas stations, Uber/Lyft, etc.
The set perk card, will give usually around 3%-4% cash back on a set category, for example the Savor card by capital one gives 4% cash back, or the quicksilver card give 1.5% cash back on every purchase.
There are also what I like to call super cards that have all the perks of all three categories. This is like the Costco card, which is a set perk store card that gives 2% in Costco, 3% at restaurants and travel, and 4% at the gas pump.
WHAT YOU NEED TO DO is pay attention to where you spend money. If you go to target regularly, maybe you should get the target card and make 5%, if you always shop at Costco, get the Costco card. Have a few rotating category cards so that you can have a better chance that a category you use is always available. For everything else that you don’t have a specific card for, get a 1.5% cash back card because it is better than swiping the 1% on everything else card.
Perks in General
Most Credit cards offer some perk other than monetary. This could be travel insurance, roadside assistance, Access to VIP lounges at airports, free nights in hotels, rental vehicles, etc. The Points Guy website covers a lot of these perks, but in the end, it is up to you to determine if any of them are worth it. For example, the Sandals resort card gives an extra night at the resort, but are you every going to use it? Alternatively, the Savor card gives a $500 bonus when you spend $3000 in 3 months. Probably $500 cash is better than a free night you might never use. But once again, if you are planning something, use credit cards perks to cover it.
In conclusion, this article is a broad overview of how to use your credit score to make money. There is a sweet spot in your score that you want to hit and stay at in order to be able to qualify for the cards you need to get the best returns. This sweet spot is usually of 700. Read and stay informed on Individual Economics to get to this point and stay at this point. There is a lot of money to be saved and made by introducing this no-brainer easy system into your life. Whether you use one cash back card or use all the strategies this website offers, you will get more buying power. See you in Jamaica man.
