Getting the most out of Cash Back Credit Cards

Is there anyone that is still using cash?

If you are, shame on you. You’re missing out some great discounts.

I must admit that I’m a late convert to the use of my credit cards for mundane purchases, such as at fast food restaurants and airport newsstands, but my eyes have been opened. Every purchase you make has the potential for a discount, typically in the 1 – 5% range.

I have been a loyal and prompt paying credit card customer for many years. Since I travel on a weekly basis, I do rack up quite a few credit card charges. Up until recently, my reflex action was to always reach for the same old trusty credit card, hand it over and then pay my bill.

Month after month.

But that all changed as I started actually looking at the slew of credit card offers that came my way on a regular basis. All of a sudden, something clicked in my “auto-pilot” way of making purchases.

It all started with a great offer from Discover Card. After taking advantage of a no interest and no fee cash transfer, I realized that not only could I get 1% cash back bonuses for your purchases, but every 3 months, a specially designated category of expenses, such as travel or restaurants would offer a 5% cash back bonus.

Especially nice is that the Discover Card cash back bonuses can actually be leveraged even further by converting them into gift cards at a number of popular retailers. A $20 cash back bonus can easily become a $25 gift card.

When it comes to holiday gifts, I just cash in my Discover Card points for gift cards and happily send them off to friends and family. It feels great to give a gift that has real and tangible value, yet doesn’t feel as if it costs me anything.

Not bad, but Discover Card typically places limits on the amount of your 5% bonus purchases, so you may have to look elsewhere to get the most out of your routine and extraordinary purchases.

Why settle for limits, when you can get even more?

Why settle for 1%, such as from American Express OneCard, which will deposit your cash back rebate into an interest bearing account, when you can get 2 or 3% on a regular basis?

In fact, I now have an entirely new collection of niche credit cards, that offer cash back rewards in different purchase categories. For example, I use my American Express Costco card at restaurants, where each purchase gets a 3% cash back reward.

As it turns out, however, food is food. Where once I would never have imagined swiping a credit card at a fast food restaurant, now I would never think of using cash. 3% is 3%.

Gas and Groceries? Do you use those on a regular basis? Then you’ll love the Chase Freedom Reward Card. You’ll get 1% back on all purchases, but 3% back on purchases made in 3 select categories.

Although my wallet is now bulging with a variety of credit cards, the credit card shuffle is well worth it, as I make conscious decisions over which card to use for a specific purchase.

In fact, I recently purchased a car. As I was reaching for my checkbook for the down payment, it suddenly occurred to me that I was about to miss an opportunity.

Instead, I reached into my wallet, pulled out a cash back card and as a result, will receive an additional $30 back. I didn’t even need to negotiate that additional little discount. I just had to change my way of thinking a bit.

Of course, getting cash back is wonderful, as long as you have the discipline to pay your charges off in their entirety by the monthly payment deadline. I would never use my charge cards for routine purchases, if there was even the slightest chance that they would end up costing me prohibitively in interest charges.

But if you have the discipline and the ability to make those monthly payments in full, then why not get 25 days of interest free use of the bank’s money and earn a cash back discount for money that you would have spent anyway?

It’s never too late to change your behavior. Cash may be king, but it’s the right credit card, at the right time that will build up your cash pile.

Profit from your spending.