Saturday, December 19, 2009

It Pays to Discover

Okay, I can't believe I just used a capitalistic, consumeristic tagline as my title.

But seriously, friends, it makes so much sense to use a Discover credit card for as many monthly purchases as possible and then earn money back.

Disclaimer: Only use credit cards if you can pay off the entire balance each month! I am not advocating that you start racking up credit card debt. On the contrary! Credit cards can be super-dangerous because they can deceive you into thinking you have more money than you do. And honestly, it's stupid to pay money for money (which is what we do if we carry credit card debt) unless we absolutely have to (e.g., student loans, car loans, mortgages, emergencies, etc.).

I don't mean to pontificate from my soapbox. It's your life. I'm just saying that Matt and I received $571.90 from Discover because we put everything on our Discover credit card and it helped us accumulate a serious cashback bonus after a significant amount of time.

I have no idea how long we've been accumulating that bonus, but I do know it's completely free. We don't even pay for the cost of a stamp to send in our bill each month. Instead, we send an electronic check from our ING Direct account. Voila!

I know some people like using debit cards or cash in their wallets because there's a finite amount of money and they can see the supply getting depleted each time they buy something. I like that feeling, too, which is why I keep an index card in my wallet and keep track of how much I'm spending. I start with our month allowance for groceries, joint entertainment (including dinner out), dog bills, medicines, hygiene, etc. (which is $1,060, in case you're curious) and subtract the cost of whatever we spend. That way, I get the feeling of a finite amount, but I can still use my Discover card. I even try to pay some of our bills on our Discover card.

The only hitch is that Discover isn't accepted everywhere (like our favorite ice-cream store), but we just carry a backup Visa card and use it whenever necessary.



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4 comments:

Julia (Color Me Green) said...

there are a lot of credit cards that offer cash back rewards, not just discover. that's why we primarily use credit cards, because we know we're able to pay it off in full every month and will end up making money when we get all that $$ back.

Sara E. Cotner said...

@ Julia: Do you know what your cashback rate is? I should start looking into this and make sure I use the card with the highest percentage...

Julia (Color Me Green) said...

my hsbc card is 1%; my citi diamond preferred card is 5% on supermarkets/gas & 1% everything else. if you want to compare rates, you should check out bankrate.com - it's a great resource for comparing financial institutions.

elizabeth said...

The only problem with cards that give you cash back is that the money is coming from the merchants, not from the credit card companies. It's really hard on smaller businesses.

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