Credit Cards / Cash Back & Rewards Options

[Gravedigger]

Jughead, that is actually a common misconception, and closing credit cards is about the worst thing you can do aside from having a balance. Having open credit cards with no balance increases your credit to debt ratio, which in turn increases your credit score. My auto loan was 0% (US Bank), motorcycle loan was 0% (GE Capital), and mortgage was 3.4% (NBOKC). There are plenty of credit card advice websites out there, and there are plenty of people with 50+ credit cards and perfect credit.

[flyjetz]

Jughead, that is actually a common misconception, and closing credit cards is about the worst thing you can do aside from having a balance. Having open credit cards with no balance increases your credit to debt ratio, which in turn increases your credit score. My auto loan was 0% (US Bank), motorcycle loan was 0% (GE Capital), and mortgage was 3.4% (NBOKC). There are plenty of credit card advice websites out there, and there are plenty of people with 50+ credit cards and perfect credit.

Agree with Gravedigger, with one caveat. Another factor that affects your score is the average age of the credit line. So if you've been loyal to one card for 20 years, you have an average credit age of 20 years. If you go out tomorrow and sign up for 9 new cards looking to increase your credit to debt ratio, you will be drastically lowering your average credit age, which will hurt you. Just need to be smart about how you play the game.

[Tank]

What do people think of Eagle Points with USAA?

[Jughead]

Jughead, that is actually a common misconception, and closing credit cards is about the worst thing you can do aside from having a balance. Having open credit cards with no balance increases your credit to debt ratio, which in turn increases your credit score. My auto loan was 0% (US Bank), motorcycle loan was 0% (GE Capital), and mortgage was 3.4% (NBOKC). There are plenty of credit card advice websites out there, and there are plenty of people with 50+ credit cards and perfect credit.

Seriously? First hit off of Google (from Equifax): https://learn.equifax.com/cs/Satellite?c=DS_General_Cont_C&childpagename=DecisionSimple%2FDS_General_Cont_C%2FDSGeneralContentTemplate&cid=1189578994233&pagename=DecisionSimple%2FPage%2FDSLayoutTemplate&ParentLinkID=1162919656130

Accounts in use. The presence of too many open accounts can have a negative impact on your score, whether you're using the accounts or not. This activity usually makes up approximately 10% of your score.

Plenty of other sources will tell you the same thing, if you care to look.

Now, it's certainly not the only factor (as the quote above indicates ~10%), and how many is "too many" is rather vague. You clearly have a good handle on your own credit and haven't suffered--so, good for you. I submit that is more about having the rest of your financial "picture" squared away (again, good for you) to the point where there's little or no effect on your tier, and a lot less about how you're somehow "helping" yourself by having multiple credit card accounts. Take your hypothetical twin with the same exact credit history & debt as you, but who does not have a laundry list of open credit cards--you may well be in the same tier, but his raw score will be higher. Under today's historically low interest rates, that's a non-issue (who cares what the raw score is? you only care what it gets you); if that picture changes and it gets tougher to achieve the top tier (i.e., higher raw score required for best interest rates), that may or may not be true in the future.

[Gravedigger]

I don't doubt that's what they say. I use USAA Credit Check monitoring and also access my credit score via BarclayCard and AMEX, I have only seen my score rise by adding cards, I've never seen it fall. Maybe I'm an anomaly in the system, or maybe like you said it's only a small factor (10%), and the term "too many" is extremely vague.

There are ways to purchase points and rewards by purchasing reloadable cash cards, like Vanilla, with your credit cards, transferring those reloadable cards to an AMEX Bluebird card and then paying the credit card bill with the Bluebird. That's a different level of point scheming, and takes time and effort. You can make thousands of dollars a year this way; there are tons of blogs about it if you're interested.

My message is simply that you can make a good deal of money and get a lot of perks from credit cards, and it's pretty easy to do. You're going to spend the money anyway, why not let these banks pay you to do it?

[Gravedigger]

I am not here to show you how good or bad we are at finance. You did not pay 0% true interest for those loans. You paid interest on those loan even if it was in fees (most likely). No one says "hey, please take this money. I don't want anything for giving it to you. I am just glad I could help."

Dear God you guys sure are skeptical of the benefits of good credit. Yes, banks do give 0% financing to people with good credit, it happens all the time, and there are no financing fees involved. I could have bought my motorclye easily with cash, but only a Dave Ramsey follower would pay cash when a 0% loan is available.

It looks like Suzuki (GE Capital) is still doing 0%, and I bought my bike 3 years ago: https://www.suzukicycles.com/offer.aspx

Here are some current 0% auto loans: https://best-car-deals.buyerreports.org/0-apr-car-loan-deals

I am not posting shit about credit cards for affirmation; my setup works really well for me, so I'm not changing it. When I commissioned I had a debit card, and that was it. It wasn't until I met some financially-smart Captains that showed me how to work this game in my favor, and I have been collecting on it for years. I don't get a commission or bonus from signing people up, but I do like to help others realize the potential out there to get free shit for doing nothing special. That is the American way, after all.

Pay cash for shit, use debit cards, buy a used Honda Accord...I really don't give a shit what people want to do with their money. Just don't think that's the only game in town.

Edited December 26, 2014 by Gravedigger

[uhhello]

I am not here to show you how good or bad we are at finance. You did not pay 0% for either of those loans.

I am not here to show you how good or bad we are at finance. You did not pay 0% true interest for those loans. You paid interest on those loan even if it was in fees (most likely). No one says "hey, please take this money. I don't want anything for giving it to you. I am just glad I could help."

zero percent interest is zero percent. There are no fees associated with zero percent that I know of. According to the below there are other factors to be aware of though which sounds like general business/buying sense.

https://www.bankrate.com/finance/auto/0-car-loans.aspx

[matmacwc]

I have defended DR before, but I keep an open mind. The credit card stuff looks good, and I do dabble in some rewards programs. I think his point is, eventually, you will pay interest, and the they win. Probably not this group though, just the rest of the USA. I second the 0% interest thing, you paid for it somewhere, I would think usually in overall cost.

[uhhello]

I have defended DR before, but I keep an open mind. The credit card stuff looks good, and I do dabble in some rewards programs. I think his point is, eventually, you will pay interest, and the they win. Probably not this group though, just the rest of the USA. I second the 0% interest thing, you paid for it somewhere, I would think usually in overall cost.

I think that its pretty obvious that the great majority of Americans pay credit card interest EVERY month. The rewards programs wouldn't be there if they didn't. Their loss is my gain.

[Lord Ratner]

Haha-I love credit, despise dave Ramsey but also no there is no such thing as a free lunch. If you pay 0% apt Suzuki, GE capital etc is making it up somewhere else. Either you paid a higher up-front cost or gave away some benefits. I am sure your credit helps you, but if you signed a 0 % interest loan they made money somewhere. Otherwise they wouldn't be in business.

You're confusing revolving credit with a car loan. A 0% APR loan on a car, or computer, or vacuum cleaner is not only a real offer with no strings (most of the times), it's fairly common. You see them offered by either the manufacturer (the actual Ford corporation, not the dealer) or the retailer (Newegg.com), rather than an third-party bank.

The benefit to them is that they sell the car, mattress, or computer today that you, the interest avoiding consumer, would not have bought until next month if you were paying cash. It's not much different than an infomercial offering 4 easy payments of $9.99. Less pain up front makes you more likely to buy now.

Even the credit card companies, contrary to popular belief, are thrilled to have someone like gravedigger use their credit card on everything and pay it off each month for no interest. Don't forget about transaction fees; they may not be charging you, but they are charging the retailer.

[sky_king]

Also, watch out for the "60 months interest free" on a 72 month loan. They usually throw all of the 60 months of interest on the 61st month of the loan. Most people don't read this fine print. Pay everything off within the 60 months and you're fine.

[guineapigfury]

You're confusing revolving credit with a car loan. A 0% APR loan on a car, or computer, or vacuum cleaner is not only a real offer with no strings (most of the times), it's fairly common. You see them offered by either the manufacturer (the actual Ford corporation, not the dealer) or the retailer (Newegg.com), rather than an third-party bank.

The benefit to them is that they sell the car, mattress, or computer today that you, the interest avoiding consumer, would not have bought until next month if you were paying cash. It's not much different than an infomercial offering 4 easy payments of $9.99. Less pain up front makes you more likely to buy now.

Even the credit card companies, contrary to popular belief, are thrilled to have someone like gravedigger use their credit card on everything and pay it off each month for no interest. Don't forget about transaction fees; they may not be charging you, but they are charging the retailer.

TINSTAFL, but sometimes you can get a third party to pay for that lunch.

[Lord Ratner]

I am aware of the difference. O% Apr is to get you in the door and buy the vehicle (insert noun) at their planned price and not one cent lower. If you are willing to pay interest through their banks you can buy the same thing at an even lower price bit the overall cash paid, accounting for inflation, is still the same. Yes, some people prosper off of other people actually not paying off their balances but it isn't you the consumer, it is the shareholder.

Not always true, though a savvy dealer will try to make you think that.

Most times the agreed price and the financing are separate for the 0% deals. The 0% financing comes from the manufacturer, not the dealer or his partner bank, and is not affected by price since the manufacturer charged true invoice regardless of what the dealer convinced you to pay.

Now, the dealer will try to keep the price higher by any means, to include implying that the low financing rate somehow merits a higher price. A skilled buyer will go into the dealer claiming he does not plan to finance, negotiate the cash price to a defined number, then ask about manufacturer 0% financing. They'll fuss, but not enough to make you leave.

Again, this only works for manufacturer incentives, since their target is volume.

Edited December 27, 2014 by Lord Ratner

[Gravedigger]

The vast majority of consumers are not smart when making big purchases. That's how companies make money. I do quite a lot of research prior to making big purchases to ensure I get the best deal possible. When I bought my car, I found every possible rebate and credit offered by the manufacturer and dealership prior to going in, and I bought a new car at the very end of the model year. I ending up paying $7,000 less than MSRP with 0% financing. I got a grand for military discount, 3 grand for promotional credit from the manufacturer, 2 grand in dealer credits, and 1 grand in multi-car discount for buying a second car from the same dealer. I also got blue book value on my trade in.

95% of the time, companies still find a way to get their piece of the pie, but that 5% is out there where they are just looking to make the sale to reduce inventory, bump sales stats, etc. You can be that 5% with a little bit of research and planning. I'd also recommend reading the book Bargaining for Advantage.

[uhhello]

The vast majority of consumers are not smart when making big purchases. That's how companies make money. I do quite a lot of research prior to making big purchases to ensure I get the best deal possible. When I bought my car, I found every possible rebate and credit offered by the manufacturer and dealership prior to going in, and I bought a new car at the very end of the model year. I ending up paying $7,000 less than MSRP with 0% financing. I got a grand for military discount, 3 grand for promotional credit from the manufacturer, 2 grand in dealer credits, and 1 grand in multi-car discount for buying a second car from the same dealer. I also got blue book value on my trade in.

95% of the time, companies still find a way to get their piece of the pie, but that 5% is out there where they are just looking to make the sale to reduce inventory, bump sales stats, etc. You can be that 5% with a little bit of research and planning. I'd also recommend reading the book Bargaining for Advantage.

Simply not possible. The buyer always loses. Sarcasm.

[JS]

Yes, the retailers pass those costs onto everyone, including those paying cash. I would like to thank all the cash paying DR followers for subsiding my credit card rewards!

Bingo! This is actually a very true statement that I argue about with friends all the time. Seriously, cash payers are paying a "premium" by not taking advantage of the 2-5% premium that most prices already include due to the widespread use of CCs. There are still places out there that either won't accept CCs or have a higher rate (coincidentally about 5%) more for using CCs.

I have defended DR before, but I keep an open mind. The credit card stuff looks good, and I do dabble in some rewards programs. I think his point is, eventually, you will pay interest, and the they win. Probably not this group though, just the rest of the USA. I second the 0% interest thing, you paid for it somewhere, I would think usually in overall cost.

I was not a big fan of Ramsey either, but I actually think his real point is that you will spend more through plastic because it is easier to use than cash. I have tried it, and I think it is true. If I had to unfurl crinkled dollar bills for every beer at the bar, snack at the grocery store, or meal at the restaurant, it would have a much greater sting and I think I (and most people) will pay less. I don't think Ramsey ever actually argues that you will eventually pay interest/fees even if you are paying the card in full each month. His primary point, I believe, is to live beneath your means. Using plastic us just so much easier that people spend more than they would had they used cash.

Agree with Gravedigger, with one caveat. Another factor that affects your score is the average age of the credit line. So if you've been loyal to one card for 20 years, you have an average credit age of 20 years. If you go out tomorrow and sign up for 9 new cards looking to increase your credit to debt ratio, you will be drastically lowering your average credit age, which will hurt you. Just need to be smart about how you play the game.

I am sure excessive lines of credit is bad, but I would imagine the overall amount of credit available to you is one of the biggest factors, plus the amount of credit that you are using. I can see my credit score at all times through this identity guard thing I get through Costo. All 3 of my credit scores are regularly above 800 despite that fact that I have like 10 open credit cards. I notice that when I sign up for a new one, or if any one approaches about 75% of its limit, my credit scores dip below 800 for a month or two.

Do these credit cards recognize the commissary as a grocery store?

GREAT question. I hadn't researched that exact thing, but I don't think so. I found out the hard way that when using my AMEX blue for my 6% cash back, I don't get shit when I buy groceries at Wally World, Target, Costco, or any other places listed as "discounters." Basically, if you pay full price for groceries at regular name-brand grocery stores, it should show up in AMEX as eligible for the 6% cash back. Other than that, you won't get 6% for groceries bought at convienece stores, Walmart, or other places. Be wary.

[OregonHerc]

GREAT question. I hadn't researched that exact thing, but I don't think so. I found out the hard way that when using my AMEX blue for my 6% cash back, I don't get shit when I buy groceries at Wally World, Target, Costco, or any other places listed as "discounters." Basically, if you pay full price for groceries at regular name-brand grocery stores, it should show up in AMEX as eligible for the 6% cash back. Other than that, you won't get 6% for groceries bought at convienece stores, Walmart, or other places. Be wary.

For what it's worth, my AMEX did show the commissary as a grocery store always, not a "warehouse club" etc

[Champ Kind]

Guys, to each his own.

I’m really glad that some of you have figured out ways to finagle reward point/miles using multiple credit cards. Someone reminded us earlier in the thread that there’s no such thing as a free lunch, and they are right. You are spending time to work the system and categorize your purchases on multiple different types of cards, taking the time to make sure you stay within some type of budget (I presume), and then paying off the cards every month. You are paying for those benefits in the form of time spent working the system.

It’s obviously your right to criticize Dave Ramsey’s philosophies on money, debt, and credit. I am a pretty ardent follower of his, and I will be the first to admit that it is very “simple” (something for which he is constantly criticized). I have no problem admitting that a free flight every year, or a couple hundred bucks cash back is not worth the hassle to me. My household follows a zero-based budget. I’ve gotta tell you — it is a good feeling to know that when the dump truck full of money stops by the house on the 15th and end of month, we can do whatever we want with it, and it goes where we want it to go. We’re maxing out retirement accounts, fully funding a college fund (in addition to the GI Bill), and also budgeting for various yearly expenses (travel, gifts, etc). The only “bills” we have are a mortgage, utilities, cell phones, insurance and cable/internet. That’s it. Again, I will gladly sacrifice the relatively minuscule cash back/rewards for the time saved in having to track and pay off balances on multiple credit card accounts every month.

As for some of your assertions that DR’s plan is only for those who lack self control, I respectfully disagree. In fact, I would say that it takes a great deal of self control to live debt free. You make it sound like living debt free is synonymous with an alcoholic needing to stay out of a bar…. simply not the case. JS nailed it in his post—statistically, you spend less if you use cash. If for no other reason, it’s easier to keep track of. I cannot tell you the number of people I have encountered in my career that are in loads of debt and don’t even realize it because it’s “normal”… It’s normal to have multiple credit cards, normal to have a $300K mortgage in a non-metro area outside an AFB, normal to have multiple car payments, normal to nurse your student loan debt… I can go on and on. It’s not that I am anti-credit cards, it’s more that I am against living outside of your means just because you think it’s normal.

For the record, I haven’t had a car payment in almost 8 years and have paid cash for four decent cars in that time. I haven’t had a credit card (other than my required GTC) in 5 years. Had no problem in that time getting a mortgage, and even refinancing. Having credit just for the sake of maintaing a credit score is a self-licking ice cream cone.

Flame away, fellas. Enjoy the points.

[Gravedigger]

Champ, I think you make great points, and I fully support any financial system that works for people. My critique in general is the idea that there is only one way to be successful financially.

I would not participate in Black Friday, no matter how good the deal, because I would be absolutely miserable. Others get enjoyment out of the experience, and the deal is a bonus. That's sort of like credit cards and loans to me. I find the process of playing the credit game enjoyable, and my time spent doing it (sts), is worth it for what I get in return. I recognize for a lot of people it is not at all worth the hassle, and that's fine. I have friends that spend several hours a week buying cash reload cards at drug stores to maximize points on every card they have, and calculating the reward vs. cost of the cash card on massive excel spreadsheets. That's a bit much for me. If it takes me 10 minutes to find and apply for a card that will give me $400 for purchases I was already making, that's totally worth it to me. Right now, there are 3 such cards out there, in case you're interested.

[Champ Kind]

If it takes me 10 minutes to find and apply for a card that will give me $400 for purchases I was already making, that's totally worth it to me. Right now, there are 3 such cards out there, in case you're interested.

It's not just ten minutes of your time though, is it? Unless you are using these cards for one-time purchases, you still have to devote time to picking what card you are going to spend on what purchases at set locations, and then make sure you stay within your budget in making those purchases, then pay off the balance on the card(s) to ensure you don't pay interest. Again, that takes time.

Question for you guys that use multiple cards every month... do you ever carry a positive balance on them? Maybe this is the way my mind works, but if I had a card that I only used for groceries, I could maybe make sense out of it by making an automatic monthly payment to that card of what my monthly grocery budget would be, and then just make sure I don't spend over that amount. Even that added effort isn't worth the $30-40 I'd make in the 5% cash back, but it's the only way I could make sense of it. As it stands now, we take out cash every week, and of that cash we have a set amount we spend per week on groceries (among other things). When that money is gone, it's gone. No overspending, no credit balances. It's not that we were ever undisciplined in our spending, but it simply prevents it from happening in the first place.

Edited December 29, 2014 by Champ Kind

[TreeA10]

One card, pay it off each month. House is paid for, cars are paid for, kids college is paid for with money left over for them.

[Gravedigger]

It's not just ten minutes of your time though, is it? Unless you are using these cards for one-time purchases, you still have to devote time to picking what card you are going to spend on what purchases at set locations, and then make sure you stay within your budget in making those purchases, then pay off the balance on the card(s) to ensure you don't pay interest. Again, that takes time.

Question for you guys that use multiple cards every month... do you ever carry a positive balance on them? Maybe this is the way my mind works, but if I had a card that I only used for groceries, I could maybe make sense out of it by making an automatic monthly payment to that card of what my monthly grocery budget would be, and then just make sure I don't spend over that amount. Even that added effort isn't worth the $30-40 I'd make in the 5% cash back, but it's the only way I could make sense of it. As it stands now, we take out cash every week, and of that cash we have a set amount we spend per week on groceries (among other things). When that money is gone, it's gone. No overspending, no credit balances. It's not that we were ever undisciplined in our spending, but it simply prevents it from happening in the first place.

Here's what I do, I find a card with a great deal (like $400 or $500 for spending $3,000 in 3 months) and I use that card exclusively until I reach the target dollar amount. Once I reach the target dollar amount, I cash out my benefits and move on to the next card, or go back to my go-to daily use cards like Chase Sapphire preferred or Chase Freedom if there aren't any good deals running. If I am buying plane tickets to Thailand or making big purchases, it might take me a month to hit the dollar amount, if I am not making big purchases, it might take me the full 3 months.

If I am taking a trip where I want to use up the free airline credits on my Amex cards, I will bring those cards with me and buy seat upgrades or drinks or movies or whatever just to use those benefits. For the Amex platinum, I might use it on two or three trips before I hit the $200 airline credit limit. Either way, the refunds post before the bill is due, so I pay it as soon as the refunds post, then put the card in the drawer until the next year.

At no point have I ever carried a balance on any card, because I don't want to ever pay a cent of interest. I have also never paid an annual fee, they are either waived for military every year, or I get the first year for free, then drop the card down to the non-annual fee version at the end of the year.

This might all sound like a lot of work, but you can easily manage all of it on your iPhone while taking a dump.

[Champ Kind]

This might all sound like a lot of work, but you can easily manage all of it on your iPhone while taking a dump.

But then how would I have time to check BODN?

[Day Man]

For the record, I haven’t had a car payment in almost 8 years and have paid cash for four decent cars in that time.

While I agree it is unwise to carry a lot of debt, you probably lost money with this plan. Debt free doesn't always equal most fiscally advantageous.

Also, it sounds like you're assuming people with multiple credit cards have a lot of debt; that's not always true. The Amex Platinum requires that you pay it off each month. Considering it was free, that thing paid for itself in one sitting at an airport lounge with an open bar.

[Champ Kind]

While I agree it is unwise to carry a lot of debt, you probably lost money with this plan. Debt free doesn't always equal most fiscally advantageous.

I probably did "lose" money by executing a debt-free budget. Like I said in my post, I'm okay with that considering the opportunity cost of time to keep track of expenses spread across multiple cards with the amounts/period of time constraints as Gravedigger described. We have been doing just fine--that couple hundred, even a few thousand, that we "missed out" on by not using credit cards doesn't affect our lives because we weren't counting on credit card companies to supplement our income to begin with.

Also, it sounds like you're assuming people with multiple credit cards have a lot of debt; that's not always true. The Amex Platinum requires that you pay it off each month. Considering it was free, that thing paid for itself in one sitting at an airport lounge with an open bar.

Didn't mean to sound like I was equating multiple credit cards with a lot of debt. What I have seen a lot of though is fellow officers living outside of their means as I described (too big a house/mortgage, car payments, student loans, vacations, etc). And those same people use multiple credit cards, as you guys are describing.

As for the airport lounge perks...again, given the alternative, I'll soak up the cost of my own beers at the airport and avoid dealing with AMEX and the rest of them. No hard feelings toward them, just a choice we make, and like I said in my post earlier, I like keeping things simple. Besides....probably best I don't get too melty faced before a flight.

Edit: I didn't address the exact thing you quoted, which was the purchasing of the cars. We buy pre-owned vehicles so as not to take the instant hit in devaluation inherent with a brand new car. I researched the hell out of the year/make/models/trim for those vehicles (as Gravedigger pointed out), I figured out my bottom-line price (below retail), and then offered that amount and no lower. I found the negotiating to be easier when you tell them outright you aren't interested in financing, we are either going to cut a check or walk to the other dealership that has the same vehicle we want and see if they are interested. Trust me, I didn't lose money on those deals.

As far as the 0% financing deal goes... I don't fully own that car until it is paid off, regardless of interest. If I was financing it, I'd want to have that money put aside somewhere to pay it off in the event I experienced a loss of income. If I have that money put aside, I might as well just pay for it in cash and skip the financing tomfoolery. I know, the "loss of income" concept is probably remote, but it is also not unheard of, and it makes for a pretty worry-free life when you own your vehicles outright.

Edited December 30, 2014 by Champ Kind