Wednesday, January 14, 1998
Credit Card
Beloved
by [email protected]
([email protected])
I am a Foolish credit card junkie. Here is my story…
I pay for everything I possibly can on my credit card. My groceries, my gas, all business supplies, all my food. When I dine out, I ask my friends to reimburse me with cash so that I can put the tab on my card. I even put a down payment on an automobile on plastic. (The dealership kinda got blindsided on that deal since they had to pay a percentage to the credit card company.) When my cousin across the country told me he was getting all new kitchen appliances, I talked him into cutting me the check and I called the store and gave them my credit card number. I put the company Christmas dinner on my card and had them reimburse me.
So why do I go to such lengths to pay with plastic?
Airline miles. I pay First Card of Chicago 60 bucks a year for the right to try to get one United mile for every dollar I spend. It takes $25,000 on the card to get one free domestic ticket. Here's the breakdown: let's say a domestic flight is around $500. Subtract the $60 yearly fee for the card and you have $440. That comes out to be a 2% rebate on the 25K spent.
When my cousin died last year, the trip back east would have been $800. I used my award cheques to fly back free, so my rebate was even greater in my time of need.
It takes discipline to profit from this scheme. It'll never work if you look at $2,000 audio speakers and say, "Hmmm, well at least I'm getting air miles." (Although by all means use it if it allows you to get those babies past your spouse.) Don't even try it if you run a balance on your card and pay interest. I have a huge credit limit and I have paid not one dollar in finance charges.
I never put anything on the card above what I can dig out of my wallet. I figure that if I'm going to spend the money anyway, it hurts less to think that it may lead to a free trip to Hawaii.
[For more on how to handle debt Foolishly, visit our new Credit Area in the Fool's School.]
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