Sakariasen's Cheapskate Blog

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Why Credit Cards Are Not Always the Enemy October 29, 2010

I always hear things about credit card companies that, more or less, express nothing but complete disdain for them. People are often fighting against the “evil” credit card companies, as interest continues to pile onto the charges they so happily made days, weeks or even months back. Of course, things happen and sometimes credit cards appear to be the only way to pay for something that is necessary. But let’s face it: much of the debt accumulated by people is not absolutely necessary and in fact, people tend to overvalue what they need and pay much more than they have to for many things. It’s funny how fast personal responsibility fades when debt comes into play.


Of course, I think, more than anything, people really need to learn more about their finances. Period.


Now, back to the topic at hand. Frankly, I love using my credit card. I have two and primarily only use one. The one I use is a Discover card because of the cash back rewards that I receive. I have never, ever paid them a dime of interest. Ever. As  I always tell people, if you are very tight with money and cannot afford to pay whatever you are buying right off, then forget it. Like I said, emergencies arise and things happen. But I’m talking about people who really think having a newer TV is a necessity and plan on making payments over the course of the next few years. Right now, we are living paycheck to paycheck, as our income has been slashed in half, yet we are not in debt. And trust me, neither of us made a lot of money at all!


My first piece of advice to anyone who is considering getting a credit card is to shop around. There are a few main credit card companies out there but within each company are tons of different kinds of cards. Some have cash back rewards. Some have frequent flyer miles. Some offer nothing. It is really up to you to do your homework. I do not travel very often so frequent flyer miles seem pointless to me. Another reason to shop around is because you should not settle for any card. Cards also vary by interest rate. Now, if your credit isn’t so hot, you’re probably going to find some difficulty in getting the best interest rate out there. Thus, you need to be really careful with this. Do not get a credit card if your credit is terrible because you have an addiction to shopping. This is really ideal for people who are good with their money or for people who are trying to get their credit back on track and have self-control.


I chose this Discover card because of the 1% I get back on every purchase. Furthermore, every season, I can sign-up for things that will give me 5% cash back. For example, one season might offer 5% cash back on all grocery stores. That means every time that I shop at a grocery store, I will receive 5% cash back credited toward my Discover account.  (However, this can be limited. I have noticed it say, “Up to $300.” And that’s per season.) Additionally, Discover does something where if you shop through their website, you will receive a greater percentage back. For example, if I want to shop at, I will log into my account first and then click through the website to get to the Target website. I have done this before to get 5% cash back as opposed to the 1% regular cash back. I actually went to check and they give anywhere from 5-20% extra cash back, if you click through their site to shop and use your Discover card for the purchase.


Now, when you want to cash in your rewards, you have a variety of options, which I also like. For straight shooters, you can have the cash deposited directly into your account. Personally, I do not choose this option because I like getting more bang for my buck. You can also purchase items directly off their website, which I’m not really interested in either. The thing I generally do is I turn my rewards into a certificate or gift card, especially considering I am usually buying things from these places. Discover offers a variety of stores to choose from so your options are seemingly endless. Let me explain why this is usually the best choice. I need to purchase books and I plan on purchasing them from B&N. Discover allows me to use $40 of my cash back rewards toward a $50 gift card. What does that mean? That means that Discover takes the $40 from your rewards account and applies it to a gift card, resulting in $10 of your gift card being free. Essentially, I just got $10 free to spend at B&N, which I was going to do anyway. But this way makes the most sense.


Keep in mind—you are not going to get rich by doing this. Again, I have not paid Discover a dime of interest but they have paid me, over the past few years, hundreds of dollars that I can use for whatever I want. We’re going to be really hard-up this Christmas, so my partner-in-crime, who has about $500 in cash back rewards and I will be either distributing gift cards to our families or buying gift cards and, in turn, buying things from those particular stores. Either way, this is why I love my credit cards—because I love getting things for free!