Most of us use our credit card every day to buy groceries, to pay at the gas station, to make big purchases or just pay in a local restaurant. We always have the option of paying either with a credit card, or with cash. It seems like there is no difference, but that is only if you do not plan your monthly budget in advance. Most credit cards today offer a reward rate, which typically is 1%, however, today many companies, to beat the competition, already started offering their customers 2% reward rate. Bearing in mind that the bank received 1,9% from merchants for credit card transactions, this is actually a very generous bonus. This is a basic reward rate, meaning that if you spent $2000 this month, you will get around $20-$40 back, depending on your current reward rate. This obviously may not seem like a bonus one would die for, but if you have a choice of paying with a credit card that gives you a certain cash-back percentage, and you map your budget on a regular basis, why not benefit from a small return on your purchases? This is especially beneficial, if you don’t like carrying cash around and pay all, or most of the time, with your card.

If you plan you budget smart without overspending just for the sake of the rewards (which is the worst possible thing you can do!), and you commit to pay all your purchases (or at least most of them), using your credit card, you can reap the rewards on a monthly basis, and while it may not seem like a lot at first, if you have a highly advantageous credit card, with low (or zero) interest and high reward rate, your annual rewards will account for hundreds of dollars, and that is the reward rate alone, not to mention the points, you will be gradually accumulating if you start using your card regularly.


Remember, that if you are a traveler, vast majority of the popular credit cards today will offer fantastic sign up bonuses in form of points, which are then redeemed at a typical 1:1 ratio for airfare miles and can pay for your vacation. Our personal favorite card is the Citi Double Cash Card, it offers 0% on balance transfer for the first 15 months (then raised to12.99% to 22.99%). The first year is free from annual fees and there is a massive, unlimited 2% cash back on all purchases you make with your card. While all credit cards may have a catch or two that you need to be aware of, when using this card you simply get 2% back. So do the math, if you (or the entire household) spend $2,000 every month, you’ll accumulate about $1000 in two years from now. The only possible downside, is that you won’t get the reward instantly. You receive 1% when you swipe, and the remaining 1% after you pay off your bills. However, it’s still 1% above what you would normally get with other credit cards, so it’s worth the effort.

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