A Better Way to Manage Your Everyday Money - Book - Page 97
nothing applied to the purchase transaction balance. This can result in interest being charged
unexpectedly for the entire purchase transaction balance.
The best strategy for getting cash advances from a credit card is don’t, unless you have
absolutely no other choice.
Rewards
If a credit card company offers you the opportunity to earn cash
back, points, or miles on purchases, the credit card is a rewards
card. Rewards cards either provide you with the same number of
rewards for every purchase (known as flat-rate rewards) or offer
bonus rewards on certain purchase categories such as increased
earning rates on dining out, gas, or groceries. You earn rewards
on purchases only, not on balance transfers (moving the balance
on a credit card to another credit card) or cash advances.
Paying bills with a rewards credit card lets you earn card
benefits by paying your bills. The downside of using credit
cards to pay bills is that you have to pay the credit card statement’s new balance in full each
month to avoid offsetting your rewards by paying interest. If you can pay the full new balance
amount consistently, using rewards credit cards to make bill payments can be quite, well,
rewarding.
Rewards credit card programs vary as to which rewards are earned, how the rewards are earned,
and how the rewards can be redeemed. Do your research to find a rewards credit card that fits
you best.
Lois and I have two credit cards that we use regularly for day-to-day purchases. One card is from
Amazon, which gives cash back. We use the refunds from Amazon when we make an online
purchase by applying any outstanding refund money toward the purchase price. It’s not unusual
for us to buy items for free.
The other credit card that we use regularly is from Costco. A percentage of purchases made at a
Costco warehouse and elsewhere are returned annually in February as cash. Our annual refunds
have ranged between $200 and $450.
87
