In this Quick Tip, we discuss rewards cards. Find out why everyone should have one in their wallet, as a very practical financial tool.
Oregon Cash Flow Pro
Hey folks, today’s quick tip: Rewards cards, who needs them?
In my opinion, regardless of where you’re at in your journey towards financial freedom, I believe everybody should have a rewards card.
Now, there’s very practical reasons for this. There are a lot of things out there that you can use a credit card for and pay the exact same amount of money as if you were using cash, or if you were using a debit card. There’s no difference. If that’s the case, and you’re using cash or you’re using a debit card, which is the same as cash, something that doesn’t give you any type of reward or cash back, you are losing ground. You’re paying more for that product or that service than the person using the rewards card, who can get 1%, 3%, 5% cash back or earn some other type of rewards that are the equivalent of cash to those people.
As an example, let’s say you spend $1000 on a product and you pay cash, and your neighbor has a 5% cash back rewards card that he uses. He just got that exact same product for $950. Now, if both of you are going to try and then sell that product, his basis is $50 less than yours. So he’s going to be able to sell it for lower than you can sell it and not have to worry about losing as much money.
So, just to be clear, using a rewards card can be very practical. It’s just like using a coupon. You end up paying less for the product or service than you would have otherwise spent.
Even if you are not a credit card person, you don’t like using credit cards, we always recommend nobody carry a balance from month to month on their credit card, unless it’s a zero percent. But there’s very, very practical reasons for you to use it. That money you save can just help you on your journey to financial freedom.
So, I’m going to do a quick rundown on some of the rewards cards that you can find out there. We’ve got travel rewards, whether it’s airline miles or hotel points. There’s Uber rewards. There’s 1-5% cash back. There’s 0% interest periods. You can get 0% interest for 6 months or all the way up to 18 months that I’ve seen. So, a lot of good opportunities there to borrow money at 0% and offset some interest you might be paying somewhere else.
On top of that, there’s no cost balance transfers available. So, if you do have a higher interest debt and you can transfer it to a lower interest debt, then that can make a lot of sense. Even if you’re transferring to a zero percent card, if that cost to transfer is say 3%, and you get 1 year of 0% interest, you can transfer a balance from anything that you’re paying more than 3% on and you’re going to be in a better situation interest wise.
Then of course, there’s bonuses for spending a certain amount within a certain period of time. So, some cards give you a huge bonus if you spend, say, three thousand or five thousand dollars within the first two months or three months.
So, take a look out there. There’s a lot of groups out there that you can join, that can help you maximize the use of those rewards cards, and there’s people that can help you along the way.
Enjoy, have fun, I hope this quick tip helps you out!
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