Okay you had me until the credit card cashback. That shit is free money. Of course it's used to entice stupid people into opening new credits cards. But if you're not an idiot and you optimize spending categories, you can easily make/save an extra ~ $1,000 per year from cashback
I live in a ~50K population city and it has a relatively low cost of living, but doesn't have everything I need all the time, so I use Amazon. The free Prime Visa gets me 5% credit back on stuff I was going to buy anyway and 3% on gas (I think).
My daily CC is a no-fee one from Fidelity which puts 2% CB into my index fund. Finally, I have a Chase rotating 5% category (gas, groceries, and other random shit I may not need) Every bit helps!
Edit: I pay the balance every month, so interest rate doesn't matter.
Solid! Didn't know about the prime card 5%. I don't use amazon much, but if I did, that's a good one! One I've added recently is AMEX Blue preferred for 6% on ALL groceries
I feel like their prices have gone up a bunch. I compare to Walmart and sometimes it's thirty percent cheaper, but I have to wait two days. Not true for all items
Amazon is 5% but if you can wait a few extra days, you can often get 6% .
For the Amex cash preferred, you’ll have to double check your grocery store on the list of accepted grocery stores. If you’re like me and frequent mom and pop or international grocery stores, you might not be getting the 6%
I've seen up to 10% for some things on Prime Days. The trick is not to buy something just because of CB. My mom once told be "there's no better discount than not buying the thing" (that's before I learned about free or negative cost after rebate, of course).
I love this card. But just in case you didn't know. It's all groceries from a grocery. Walmart for instance isnt classified as a grocery. So that will be 1%. Kroger or like however are $$$
Yeah, they exclude stores like Walmart, Target, etc. I do most of my grocery shopping at a store that only takes cash, debit, and checks so that's not too useful. This store does take Discover, but I have a hard time getting another card for just groceries, even though there would be a little CB.
That 5% only comes around about 1 quarter per year with the Chase Freedom Flex card (I think that's what it called). There might be chain-specific cards (Shell, Sam's, Kwik Trip, etc..) that give 5% consistently though.
I’m busy to but I hate amazon and I never needed it before and I won’t now. They ruin everything. My mother was single mother with 4 boys and worked 2 jobs. She never had amazon. Fuck amazon. It’s ruining everything.
I use apple card. It's not as high of a % back as my Amazon card but it's way more convenient. I don't have to log into a website to pay my bill or check my spending ect. The apple wallet breaks everything down and I pay it off each week.
Yeah I'm really confused as someone that generally never pays interest, because shocked, it's really easy to not pay interest if you're fiscally responsible. These same people probably have just as many other issues in life that are as bad or worst than the credit cards.
I'm 42. I just started using credit cards a couple years ago. I wish I had started sooner. For almost 20 years my credit stayed around 600 because I only ever financed cars. I wish people had taught me how it works. Just in the last 2 years my credit has jumped to over 750. I have not payed a dime in interest because I only use it how I used my debit card and pay it off every month. There needs to be a class in high school... Even if it's just an elective. I held myself back so hard because I didn't know any better.
Credit card companies make money from merchants, too, so I don't feel bad for not having paid them a dime in fees and getting thousands of dollars worth of points over the past 25 or so years.
We teach it at our high school or I find a way to weave it into lessons, but many students are not interested or don't care. The ones that do are receptive. Many students get stuck on the idea of trade stocks to get rich quick and I always recommend to look at other ways beyond playing stocks to invest
There are people I graduated highschool with that complain that they didn't learn about personal finance and had to take algebra 2 instead. They did, in fact, take a personal finance class where they learned how to create a budget, write a check, how interest works for debt (including mortgage and car), and how investing and 401ks work.
On top of that, our algebra 2 teacher (small school, so everyone had the same algebra 2 teacher) was a fantastic teacher that weaved real life situations where algebra 2 was applicable (like interest rate calculations)
Don’t forget to only utilize roughly 30% of your available credit balance each month to help your score even more.
Example-
10k credit card availability. Spend 10k that month and pay it all off. Hurts credit score a bit.
40k credit card availability for 4 cards. Spend 2.5k on each card and pay off the 10k and you keep your score higher.
Using multiple credit cards in order to keep balance at 30% of each cards total is better then only using one card and maxing out its availability even if you pay it all off before it’s due.
I have three cards; I only use one for everyday purchases, and the other two for specialty items (cruises, airfare for trips back to the home state). Almost never pay interest, as I pay off the balances each month. I went on a spending spree this past summer, and my score dipped to the middle 700s. Two months later, it is back up into the low 800s.
I mean that's the plan. Right now the only debt I have is a motorcycle. Been working on my credit to be able to buy a house. Credit going up and house prices are slowly going down in my area. Car is 4 years old, paid off and I have the title in my safe. My other motorcycle has been paid off for almost 10 years now.
As someone who rents, having a good credit score is also very useful for getting yourself picked in a competitive rental market. So helpful even when not taking on debt.
You are SO right. There should be a high school class about money. When I was in my early 30’s, I got a job at a larger company. They had classes at night that you could take at work. The first I took was called Money Master. They taught us basics like balancing a check book, but also taught us about credit, and how to use it wisely and to our advantage. The next class was about investing. It focused on stocks, mutual funds, compounding interest, risk tolerance, bonds etc. I learned a lot. I recently got into a discussion on Reddit with younger folks complaining that their parents have a mortgage and they would get saddled with it. I tried to explain that maybe their parents have decided not to pay off their house because they have a low interest rate and make more money with their investments. Tried to tell them about compounding interest. They told my I was just spewing garbage and I was an ass for not paying off my house. Oh well I tried.
There used to be classes in school, they were called economics and home economics. Schools pretty much did away with both of them after I graduated in the mid 90’s or convinced kids they weren’t essential. These classes taught everyone how interest works, paying bills, balancing their checkbook, running their household, how to save, credit scores, stocks, pretty much everything financial
The "if you're fiscally responsible" is the key here.most aren't. That and sometimes people do have shit happen where they can't be optimal financially.
Was about to say—for most people, yes, they will pay more in interest.
But there’s churners out there who absolutely make out, which is why those kind of rewards have gotten so restrictive and companies will deny you credit if they think you’re exploiting signup bonuses. They wouldn’t do that if they were making money on it either way.
For sure, but there are hidden costs that can significantly eat into the normal everyday points (think credit vs. cash for gas, any interest/fees/penalties, processing fees, etc)
My wife and I get well over $1000 cash back every year from our credit cards. All expenses go on cards that don’t charge a large convenience fee (edit: convenience fee refers to the expense charging a convenience fee, not the card itself). All of that gets paid from a checking account at the end of each month. No interest is ever paid. Anywhere from 2-5% is brought back from those expenses. If you have discipline you can definitely make them worthwhile. Credit cards are evil if you have no self control over spending and just buy shit without a care. You will get royally fucked. But they can be extremely useful if you are in a cash pinch, need food on the table now, and know a check is coming in a couple of weeks or so and can pay it down over a couple of months.
Precisely. I keep mine on auto pay, never have to worry.
My fav is to use the sign up bonuses as vacation discounts. Take it out a month or so in advance, load all the expenses on there to meet the minimum, pay it off over the year interest free and collect a couple hundred back on it. Makes it much more manageable.
But it’s important the total balance and divide it into monthly payments, and then use autopay to pay off before the interest-free period ends.
Travel cards are extremely lucrative if you know how to play the game with points. Alaska Airlines used to offer a companion fair as a basic benefit of their credit card. No spending minimum was required and there was only a $99 per year fee. The savings on that were crazy enough to pay off 10-20 years of just holding the card with one ticket purchase (so long as you were flying with someone else. Wasn’t a good benefit for single people).
The key is to just not carry a balance. Use them instead of cash. Pay em before the interest hits. Take your rewards and run with em.
The benefits were much better a few years ago before the interest rates went up.
It used to be that you could take cash out of 0% cards and put it in your account earning 4% interest over 26 months.
Not as good anymore but still get a credit card with a £25k limit to put large purchases (usually holidays - our last one paid for our Singapore / Bali trip) onto whilst keeping my money invested.
We are just now paying off our £24k credit card as the deal expires in 2 weeks. New one already scoped out - offers 23 months at 0% with ~£20k limit.
As mentioned - easy to manage IF you are financially responsible.
You just explained the logic. The goal is to get stupid people to see it as "free money" or even worse, "earning by spending". For the financially literate it is indeed free money, but for many it is a psychological trap they use to justify horrible behaviours and spending habits with "well I got 50$ cash back" when they spend hundreds- thousands on things they didn't need
If you have your head on straight, it's free money. If you can't manage your money, they'll turn you inside out faster than you can say "2% cash back on gas."
Yeah, the cash back is legit if you can just spend within your means. We use our prime card for every expense we have every month except our mortgage and pay it off. We have earned close to $1,200 so far this year.
Same I use my points card for literally everything I can. I’ve never carried over a monthly balance. Never paid a cent of interest. If you do it that way it’s easy free money. The card companies come out ahead overall because of how many people do carry over balances and accrue interest.
I’m using navy fed cash rewards. It’s just a vehicle to pay what you needed to buy anyway. When I see any balance at all I go ahead and move money to zero out the balance due. It just kills me to see people paying for things with a debit card.
The easiest one for me is Costco. We shop there enough to have an executive account and a Costco credit card. We get cash back on the card but it’s usually just enough to pay for the membership which is juuuuust fine by me
My stepdaughter was afraid to get a credit card because ofher real Mom's struggles with debt. I told her to get one and charge something small once or twice a year and pay it off in full when the bill came. The card was for emergencies, but a occasional charge paid in full would improve her credit score for buying a car or house. She did as I told her and when she had to evacuate for a hurricane, she was able to get hotel rooms for herself and friends.
CC companies aren’t stupid, they make money on these deals. Most people (even the ones that lie) don’t pay of their balance monthly and have interest that costs more than they make in cash back or other rewards. Also, you spend a lot more when using a credit card vs cash or debit
Same... I realized a few years ago that I needed to look like a good little sucker if I wanted the benefits of a 825+ credit score.
I now have over 500k of available credit card debit, but only "use" 3k to 10k a month... All of which is paid off and occasionally reported and is mostly normal monthly spending.
Makes it look like I use credit even though it's always paid off.
So now I not only get a free few hundred dollars a month with regular spending I would have done anyway, but I also pay less for insurance, etc...
Exactly!!!!! I just cashed out $6k in free money! I pay everything with the credit card, pay it off before the end of the month, pay no interest, and earn cash while doing it…..People need to learn better financial discipline.
Every single item he listed is predicated on not being stupid. Affirm loans can actually be incredibly useful with 0% financing over 12 months, being a 9 year car loan, is in fact not smart, owning a 10 year old car is an investment in pain, whether you sell it or not.
So is your point not to be stupid, or are you supporting getting credit cards for rewards?
Ok, so point that out instead of all of the very obvious, "If I do this, my parents likely dropped me as a child" options instead of an oddly specific one.
Behavioral economics and consumer research has proven that people spend more using credit cards than they do with cash/debit even when a person pays no interest and pays in full every month. If you’re putting hundreds or thousands of dollars a year on your card whether it’s prime or an extra cocktail because hey you’re getting 5% back on restaurants than it doesn’t really matter if you pay in full. You’re spending more. I know I know you’re different from all the rest. We all have our own anecdotes. The data is real
Also the credit card company’s also make money from every time you swipe it even if you don’t pay interest, they are just sharing some of that money with you.
Yup. I use a cashback cc instead of travel points. 1) Unlike points, the cash never expires or gets diluted when an airline changes their policies, and 2) you can spend it anywhere.
Yes, products are already marked up due to the prevalence of cash back cards upcharging processing fees which are then passed on from stores to their customers. If you’re not getting cash back you’re paying for someone else’s. Just gotta not be stupid and not accruing interest.
Maybe, anytime someone has shown me actual cash back they have gotten it is maybe $200 a year. And the only time I have pressed about whether or not they have paid interest on that card they admitted they “have a bad memory and forget to pay it on the day they are supposed to avoid getting interest but also positively impact their credit score” or some shit. People think there is some game to be played while simultaneously not understanding the rules of said game (I don’t either for the record, I just know chase ain’t offering cash back out of the kindness of their hearts)
The point is, they spent several months telling me how great cash back is while actively losing money on the interest. I would be willing to bet 90% of people with those cards in that boat.
Yea this guy is clearly a broke idiot. Paying off credit card debt with other credit cards can absolutely be beneficial with all the promotions and 0% interest for 12-24 months etc. it’s called debt consolidation.
I'm certain I've gotten minimum 5k back and only had a late fee once when I forgot a stamp before you can just pay it instantly on your phone. Pay them off weekly
The total national credit card debt is $1.26 Trillion. The average month over month balance is somewhere around $7,000.
We are a debt-ridden, under educated, impulsive nation and this reddit hard on for getting a cash back credit card is bad advice imo. Half of the people who will listen to this advice will not pay off their balance every month, will absolutely get sucked into a debt pitfall, and will never see the benefit of cash back that is so regularly preached on this site.
If you’re paying off your statement balance, it’s great. A majority of people go into it thinking 2% back is sweet, but then pay 10x that or more in late fees. Banks offer this because they make a ton of money on late fees.
i mean they are a long con and the return for all cc users is priced in anyways.
so while some save a few cents, everyone utimately looses cents they did never need to lose. and they always bank on users messing up which can happen at all times. accidents and sickness is a typical one where people blank out on keeping things covered.
This. Also credit card companies do make revenue from interest and fees, but primarily it’s just the interest from the volume of money that flows through them and the negotiating power with merchants/investing information that the data gives them.
Yes it is possible to game it and make money, but on average having a credit card (even without a rewards system) will cause you to spend more than you otherwise would if you were just using a debit card or cash.
People who are bad with money that use cashback cards do not reap the rewards. I get a ton of Prime rewards because I use that one card to buy everything. Then those Prime rewards are my toys, like a new laptop or bike parts.
5% rewards at Whole Foods is crazy, and you even get steeper discounts as Prime member. Though, we shop very selectively at whole paycheck, probably less than 10% of our grocery budget.
i make about 1.5-2k a year on cash back. 6% back on groceries, 3% gas, 2% everything else. Pay it down, never leave any money to gather interest. The problem is that retailers, and probably rightfully so, are starting to charge an extra premium for using credit cards, so you have to be careful. I already assumed all retailers just bumped their prices up 2% anyways to account for the bump credit cards take from their usage.
It’s an institutional problem not a personal one. You can say sports betting is a personal choice or you can point to the 24/7 commercial barrage. Why is it even allowed if we know what it will do. Is social media turning us into an isolated and polarized society with mental health issues? It’s your choice to use it download the app and use it right? If you just do this or just do that you too can save. Must be your bad decisions, right? If I can do it you can do it too. So everything must be your fault.
Its free money for a very small of folks that use credit cards, the vast majority do not pay it off every month, in which he (or she) is absolutely correct, the credit card company is making it up and doesnt give two shits about the 1-3% on average that they're giving back because theyre making 28%
Yeah but the data says people who use credit cards spend up to 30% more a month then someone similar bracket with no access to credit cards so his statement checks out
I agree with the points but you have to be smart. My wife and I just took a week vacation to a luxury all inclusive and it basically cost us nothing. Just used points from stuff we would have purchased anyways.
Yeah. The key is to never carry a balance on a credit card. Pay off before interest accrues and the cash back is free unless the place you buy from has a credit card fee.
I pay about $300 of my weekly spend in cash to avoid the CC fees certain vendors charges over using cash.
I have a gas card that the gas station I use doesnt charge a CC fee for since it is their card and it has cash back. I pay the balance off every two weeks and never pay interest. Free short term loan with a couple bucks in cash back.
The way I was taught to use credit cards in general is to limit my total cost per month on the to what I am comfortable paying out of my checking account and use them as a “debit card”.
For example, I like to keep 2 months of expenses + residual cash in my checkings. This usually leaves me with about one or two grand or more of extra cash in my checkings after paying rent, utilities, savings, etc. I put all groceries, food, gas and other expenses like that on my credit cards and pay the balance in full each month. Any remaining cash over my 2 month expense balance(I keep it at $4000) I have after paying credit cards at the end of the month goes into my HYSA or investments as extra savings.
I moved into this structure semi-recently as I got a better paying job and start living a little more below my means and have been able to still blow cash on things I want while saving over $10k since ~march of this year.
I understand everybody’s financial situation is different, but I think this is a really good structure to follow and the cash back from using the credit cards and always a nice bonus.
Truth. A lot of people would be shocked to learn how much money can be saved using cashback. At the very least, take what you spend each year using cash or a card, and use 1%. You're not getting rich on it, but if you spend $10,000 on a card (think groceries, gas, toll road tag, cell phone, internet provider, restaurants, some utilities, etc.) the least you can expect to get as cashback is $100 for doing absolutely nothing. If you actively look for promo rates that number can go up significantly. The Chase Amazon VISA pays %5 on Amazon purchases. A couple of the cards I have pay 3 to 5% and occasionally 10% for doing nothing more than clicking a button before I buy something from a certain vendor.
Couple that with never paying credit card interest by paying the statement balance each month and you're doing well.
It's not "free money", if it was, it wouldn't fucking exist. Credit card companies don't operate in the world of giving cash to people.
For a very small percentage of the population that can use CCs responsibly, you do get some benefits like cash back. My wife and I get a decent chunk back every year. CC companies know this.
What they are banking on is that:
Using plastic changes buying behaviour. Argue all you want about how it doesn't effect you, but you're wrong and it does.
The vast majority of people don't pay off their balance in full each month. Even if they have to give some cash back they are banking on interest.
I'm not anti credit card. We use ours for 95% of purchases, but businesses do not operate with the goal of giving money away. I feel like we are fairly responsible (no debt outside of mortgage, good investment portfolio, etc) but I do think our spending habits would change if we used cash and I bet that it would for the vast majority of people using CCs responsibly.
I have a Costco Visa card and with groceries and Gas I earn back about 300-500 a year which equates to a fun an event with the family. Like food, you have to have portion control, not use the cc for meaningless crap, just the essentials. 1% of people understand that.
The person was talking in the context of people who routinely keep balances on their cards (don't pay off full balance every month). In that context I fully agree with their statement.
I'm a cashback maximizer (have 5 cards I use to get 5% back on a shitload of category types and a fallback 2% card), but I never carry a balance unless I have a card with a promotional 0% APR period. Easily make far more than $1000 a year doing that, so I also agree with you.
It's kind of stupid though. Like people who think they're getting a good deal when they get a tax refund ... as if the government is giving them something, when they're really getting back their own money because they overpaid.
And so it is with credit card "rewards". Credit card companies charge high fees to merchants to allow merchants to accept their cards as payment. Merchants have to increase prices of whatever they sell. Credit card companies give (some) people (some of) the money that was collected as fees, provided they meet certain criteria, in the form of "rewards". People using credit cards jump for joy: thank you wonderful credit card company! thank you for giving me this free money! ... For just getting (some) of their own money back
Note that credit card swipe fees in the rest of the world are a fraction, like 1/10, what U.S. merchants pay.
Making it more evil, not everyone gets the rewards. Consider people who use non-rewards credit cards or pay in cash. They pay the higher prices, higher prices to include the swipe fees. But they don't get any rewards. In that case, credit card rewards function as a transfer of wealth from lower-income people (who don't have the rewards cards) to middle- and upper income people (who do tend to use rewards cards). Only in America!
Yeah. I have an Amazon credit card that was my first credit card back in 2005. Aside from my debit card, it’s the card I use most. The points I accrue can be used on Amazon.com. So not only do I pay my card off every month (so I NEVER have to pay late fees or interest), but I have also not spent a red cent on Amazon because I always just use my points.
Where am i paying 3% more? If they have a credit card fee, I'll use cash.
And between my cards I get 6% back on all groceries, 5% back on all gas, 3-5% on all restuarants, and 3% on all travel. Go do the math on how much you spend in those categories. It adds up.
Not as much as it used to be because you might get 2% cashback but many places now charge 3.5% to run the card so you are losing 1.5% for a little savings account. 34% of small businesses now charge.
We got an airline (Alaska) miles card a few years ago. Between us and our kids, we book a fair number of flights every year. With the miles and the companion fare, we cover well over $1,000 in travel each year. But we pay it off every single month.
Cashback is NOT free money, it's just a small refund of the high interest you pay on a credit card, most around 12 to 20% so you get 3% back. You still are paying high interest for the loan!!
can you elaborate on this cashback thing. There are some cards that let you borrow cash out of them with 0 interest for some set time, so if you pay it back on time i guess it's a free loan of a few K with zero downside. That's all you're talking about? it's a benefit but all they're doing is counting on you forgetting about it or whatever and being on the hook for massive interest.
Agreed. So far this year i have made $400 in rewards from my credit card and it is currently paid off as i Make sure to pay the balance at the end every statement cycle
I don’t use a debit card, strictly credit and pay it off weekly. I’ve earned several thousand in cash back and never paid a cent in interest. It’s possible, just have to be responsible.
Nah, 99% is crazy. I refuse to believe there's only 1% of people that pay off their balance every month without interest. Even without cashback, it's just the easiest way to build credit
personally, i don't like the concept. what are the cashbacks going to? idk if you're getting actual liquid money, but some of these credit card things give stuff like extra services at airports or some other shit like that. living a frugal life means "cashing in" to any of those things would mean actually spending more money. in addition to creating an insentive to spend more money to get cashbacks, actually cashing in some of these "cahsbacks" can mean you have to spend more money than you would otherwise.
in my coutnry we have this thing called "Lounari" or "Edenred" or whatever, where you get some tax free money to spend on restornats if you work a normal job. the issue is, yes, you get 25% off basically from buying food at lunch restorants, but it costs 14,90€, and the cost goes up every year. you're still spending more than 10€ each day on eating out, when you could as well make lunch at home for say 2€ for equivalent portions.
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u/anonymous22353 5d ago
Okay you had me until the credit card cashback. That shit is free money. Of course it's used to entice stupid people into opening new credits cards. But if you're not an idiot and you optimize spending categories, you can easily make/save an extra ~ $1,000 per year from cashback