Once you get to the point where you don’t owe anything, and pay off your credit card, in full, every month, and the bank realizes that you’re not falling for their trap anymore, they’ll start using better bait.
They’ll say “For every $100 you spend, we’ll give you points, miles or money towards free <whatever>.” They’re hoping you’ll spend more than you have and go back into debt because they really like it that way.
But now that you’re smarter, know their tricks and have paid off your credit cards, you’re not going to fall for it! You will however, happily take their money. It’s only fair, after all. They were happy to take yours.
Use your credit card for everything. Pay your utility bill with it. Pay your insurance bill with it. Car payment, groceries, anything you can. But not for anything you don’t actually need, or anything you can’t afford. Really afford. As in “I’ve had this money in the bank for 6 months and know it’s there.”
When I spend $100, Bank of America gives me $2 towards a vacation. It doesn’t sound like much, but would you rather the bank give you $2 or take $30? When I spend $1000, they give me $20. $10,000 gets me $200.
Once I’ve spent $25,000 Bank of America gives me $500 cash, towards a cruise. This is actual cash. I don’t know about anybody else, but I like free vacations. There’s nothing like steaming around the Caribbean, having breakfast in bed, hanging out on the beach and SCUBA diving all for free in the dead of winter, courtesy of the bank.
I will admit to kicking in a few hundred extra for a room with a balcony, but it’s still a sweet deal. And all because I didn’t fall for their trap of spending more than I can afford.
This could be you. Instead of sitting home next January worrying about the heating bill, you could be laying on a warm sunny beach with cold beer and a great cheeseburger.
$25K sounds like a lot of money, but when you add up what you pay for car insurance, home-owner’s insurance, cell phone service, Cable TV, internet, telephone, electricity, gas, gasoline and food, home repairs, real-estate taxes and auto repairs suddenly it starts adding up.
The trick to consumer credit is to know that the entire process is based on creating demand for stuff you don’t need, getting you to spend more than you have and then bleeding you for the rest of your life.
However if you’re careful, it is possible to work the system in your favor.
It turns out that Bank of America was still screwing me with the Cruise Rewards points, but I didn’t catch on soon enough.
The points were supposedly worth $1 each, however they were only redeemable with the B of A travel agent and only as a $500 or $800 credit on a cruise booked with them.
However, the B of A travel agent is more expensive than an of the on-line travel sites by nearly exactly the value of the points, so it turns out that the points are actually worthless.
I switched to Captial One, who pays 1% cash back. Points are not “as good as cash”. Only cash is as good as cash. Everything else is something different.