In 2013, I decided to share with our readers what we earned from using our credit cards sparingly over the course of the year. The total came to about $150.
Since that time, we decided to take advantage of these cash rewards a little more because they were fairly lucrative (as far as credit card rewards go). It seems that more and more cards are turning to rewards to help spur spending (and, I would assume) leads to folks not paying off the balances every month.
According to a Gallup report earlier last year, people are relying less on their credit cards for purchases AND are actually paying off their balances in full. This is good news.
So, while we use our credit cards strategically – I wouldn't necessarily recommend them as a great financial tool (especially if you are already in consumer debt OR have a difficult time controlling your spending).
Why do we use credit cards?
I don't want this post becoming a defense of credit card use so I will explain why my wife and I have started to use them a little more the past year as well as some pitfalls that we've experienced as a result.
A couple years ago, my wife got a credit card with our home bank. Along with the card came “cash rewards” for using the card on various items. For example, if we used our credit card on food purchases, we might get 5% back. Or, if we used the card to purchase – say – electronics, we'd get 2% back.
The draw for us was the ability to choose these items that would reward us more. So, we decided to give it a try and – on average – we earned about $15-20 per month just for using the card on items we were already purchasing.
I figured that if we could earn a few hundred dollars every year from this – it might be worth the effort. In addition, we also use two other cards for strategic purchases to earn even more.
As you might have guessed, the pitfalls to using cards is that you don't exactly know – in real-time – where your money is. My wife does a pretty good job of alerting me to purchases she makes on these cards – but it still isn't the same as “real-time” tracking with a check register.
And, it's a little bit of a hassle to log-in to these cards and pay off the balances.
What we earned
So, all that said, what did we earn in 2014? Here's a quick breakdown:
- American Express: $32.90
We mainly use this card for purchases at Costco – and namely, their gas. By the way, if you use your AMEX at Costco, they are no longer accepting them next year. - Discover card: $146.68
This is another strategic card we mainly use for large purchases (to get extra reward cash) and on 5% items they have each month. In December, Discover gives you 5% for online purchases. We did a lot of our Christmas shopping using the card. - US Bank: $211.08
This is the card that is tied to our bank account and we get an extra 2-5% on certain categories each month. Since they offer an extra bonus for grocery items – we tend to use it for food buys.
For a total of: $390.66
Now, that's not too bad for just swiping your card here and there. It's a bit like getting an extra discount on everything.
What did you earn in credit card rewards?
12 Comments
I haven’t actually calculated how much we earned last year, but it’s over $3,000. Gotta love it! :) As for keeping track, I use YNAB for my budgeting and track my credit card purchases with as much zeal as any other ones.
Geez! That’s crazy
i earned over 2000 last year
Nice Mike! That’s pretty amazing.
If you count the value of travel, I made over 1k on my cards last year. The best part is- no tax liability!
Good point – another great reward is airline miles, etc.
Nice article. My best year was back in 2008. In that calendar year, I changed over our financial family structure so that we were charging everything that we possibly could (and of course paying off 100% at the end of the month) because we had a debit card fiasco wherein our card got hijacked and the bank gave us a lot of difficulty in getting back the funds.
That year each of myself and my wife got the Citibank Diamond Preferred Visa Signature Card. Each of us received a bonus of $300 in points, so we started the year with $600 for essentially signing up. By the end of the December, we had both maxed out the program and called it a year with $1500 in points that we turned into gift cards.
2nd place was 2013: Two Southwest Airlines Visa cards that each gave 2 free flights. So that year netted 4 free flights, which was about $1600.
Holy cow Andy! That’s working the system :)
Why can’t you just enter your credit card purchases in your checkbook as you make them, in the same way you would do with other purchases? That is what I do. I got $425 in cash back rewards last year.
Sheila! I feel like the guy who misplaced his keys – only to find out they are still in the ignition. ;) Thanks for the why-didn’t-I-think-of-that tip!
If you’re able to pay your balance in full, credit card rewards can be great! Amazon gift cards are like cash to me and I can earn them faster than actual cash, so that’s what I redeem my credit card rewards for. I earn a $25 Amazon gift card every 2 months or so. It adds up!
Awesome Heather! I love Amazon cards too.