Last week, I did something that I would normally consider financially dirty. You know those dangerous blank checks that you get in the mail periodically from your credit card companies? You know, the ones that say, “Here, use this blank check to make all your dreams come true”? I used one.
Credit card companies send those teaser checks to consumers to hook them with low introductory rates, hoping that they rack up a balance and get stuck on the interest treadmill. But in my defense, this company won’t have such luck with me.
Credit cards have become almost taboo. Since they are known for skyrocketing interest rates that make payday lenders look like a bargain, few people think about credit cards as moneymaking opportunities. I do. Here are some ways I have flipped the tables on credit card companies to make sure I am the one getting the deal.
Transferring Higher Interest Rate Debt
I decided to use one of the checks that my credit card company issued for a very simple reason. I have a student loan that is currently charging me a whopping 8.25% interest rate, none of which is tax deductible for me. My plan has been to have that loan paid off within 12 months, so I used one of the balance transfer offers to go from an 8.25% rate down to 0% for 15 months. Even after the 3% balance transfer fee, I come out ahead.
Balance transfer offers can be great for short-term fund transfers that you can pay off within the teaser rate period, though make sure to speak with a CFP® professional to see if it makes sense to pay off your student loans early.
Cash Back, Free Flights and College Tuition
Whatever you like to spend money on, there is a credit card that has rewards to suit your lifestyle. I get cash back to the tune of 6% on groceries, 3% on gas and 2.2% on everything else, which netted our household more than $1,200 last year. If you have a card that isn’t giving you any perks, it’s time to change that.
Bad Guy Insurance
For those of you who use your debit card like a credit card, beware. If your debit card number or card gets stolen and is used for unauthorized transactions, the headache can be much worse with a debit card than a credit card. My card number was used once to buy $600 worth of stuff at Wal-Mart. I contested the charge immediately and never had to worry about cash flow getting disrupted. If the same thing had happened with a debit card, that $600 would have been out of my bank account for days, if not weeks, while the fraud department sorted it out.
Free Admirals Club Lounge Admission? Yes, Please
Some credit cards offer other perks such as rental car collision insurance, protections for purchases made using their card, Admirals Club lounge admission at airports, and 0% foreign transaction fees, just to name a few. A girlfriend had her laptop stolen after buying it the month before, and her credit card company replaced the computer. Not a bad deal in addition to those points!
Credit cards can be amazing tools or dangerous licenses to spend. As long as you charge only what you can pay for in cash and don’t carry a balance, credit cards can work for you in ways no debit card or cash could ever do. Now if only I could get my mortgage to go through my credit card, I’d rack up some serious points.
