Credit Card Use for Personal Gain

During the last storm, I chatted with a neighbor while we shoveled the last remnants of snow from her driveway.  I shared the news that my husband had managed to avoid being grounded by the weather; Ken took on an earlier-than-planned flight out of Logan to Salt Lake City, so as not to miss out on his annual ski trip with the guys.  I remarked that I was happy that this year’s jaunt wasn’t going to cost us much money. Some close friends were lending the group their ski house, and I was able to book the flights and “buy” Ken’s lift tickets with American Express points.  My neighbor, sounding amazed that one could do such a thing, promptly set a date for me to come over for coffee and explain the use of credit cards for personal gain.

It occurred to me that perhaps my friend is not the only one who would benefit from a tutorial in this area. When the customer ahead of me in Roche Bros. uses her debit card to purchase $200 worth of groceries, I think to myself, If she does that every week, she is losing out on a good thing. What I could do with another 10,000 points!

Credit cards are not for everyone. To make them beneficial, one needs to have the discipline to pay them off every month. Should interest and/or late fees come into play, the party’s over. But, if you are able to charge your monthly expenses, then pay the bill in full, you are a great candidate for this strategy. 

I recommend carrying one Visa or MasterCard or two cards—an American Express and a Visa or MasterCard. As the Visa commercials will tell you, there are merchants that don’t take American Express. My personal policy is to charge anything I can with my American Express card, then use my Marriott Visa for everything else.  These expenses include groceries, gas, prescriptions, clothing, dry cleaning, dining out, the cable bill, the phone bill, the oil bill, curbside trash pick- up, my kids’ sports teams fees—even braces!  Once paid, a point or mile for every dollar spent is transferred to the credit card’s awards program. That’s where the fun begins! Programs differ, but in general, points can be used for everything from department store or restaurant gift cards to airline tickets. You can even get cash back, depending on which card you choose.

Here are my picks for the best credit cards:

American Express Gold Card:

Current promotion: No annual fee for the first year ($150 savings) and 10,000 Membership Rewards bonus points after spending $1,000  (through April 30, 2010.) Membership rewards points can be redeemed for airline miles, gift cards, and merchandise. Go to www.americanexpress.com for details.

Capital One Venture Rewards Visa:

Current incentive: Double miles on all purchases, redeem miles for travel expenses of any kind, gift cards, merchandise or cash back. No fee for the first year, $59 annually after that. Earn 10,000 bonus miles if $1,000 is spent within three months.  Consult www.capitalone.com for terms.

Discover Card:

Terms: Earn 1 percent cash-back bonus on all purchases. Earn 5 percent in categories that change (travel, gas, groceries, for examples.) 0 percent APR for 6 months. No annual fee. Consult www.discovercard.com for details.

Other excellent options are cards that are affiliated with merchants you frequent often. If you travel for work and routinely stay in the same brand of hotel, for example, investigate the chain’s card.  Free hotel rooms can be earned for the family vacation. If you favor a certain airline, consider that company’s affiliate card and earn free flights.  Can’t decide? Consult www.creditcards.com to compare features of the highest rated cards available.