Thursday, October 28, 2010
First, it was the Continental Chase rewards card. They gave me 20,000 airline miles just for signing up, but little did I know that it would take FOREVER to get to the 50,000 miles to get a free flight. This usually meant spending a lot before getting our free flight! We are frequent fliers and I thought this would be easy, but I also didn't read the fine print. An $80 annual fee! Multiply that by two since my husband also had a card, and we were paying $160 in annual fees! That was my mistake. I simply got caught up in the "rewards" and didn't realize these rewards would cost anything. I cancelled both cards about two years ago. I always make sure to ask about the annual fee before signing up for anything now. We did get our "free" flight but to me it wasn't free.
Next, it was the Upromise card. Now, I did like this one, and still do. BUT, my problem with it was that even though we paid our balances off each month and got the 1% back, I just simply did not keep track of my purchases that well. It wasn't against their card, but each time the end of the month came around and I had to enter in our finances, I was not a fan of trying to subtract everything from that account from what we had in our bank account. It was a headache, but we did earn a little over $600 in about a year from that card. If you total up the gas rewards, 1% back, and online purchases, our savings did add up. But, there were times when I wouldn't mind spending a little more, because we would get the rewards. Not a good idea.
Rewards cards are tricky. Even though it is nice to get the "rewards" promised, its a mind game. You are made to think "I can spend more because I am getting the rewards!" Its also much harder to keep track of what you are spending when you are using credit cards and not your bank card. You have to do double the work to keep track of exactly how much money you have in your bank account at the end of the month, and that did get exhausting. I also wasn't 100% sure the numbers were correct, and that wasn't good enough for me. I wanted to know what we had to the penny.
About two weeks ago, I decided to quit using my rewards credit cards and plan to just use cash and my bank card only. I can't even begin to tell you how much I feel like I have already saved. One, I like when I can get cash out of an ATM because it tells me the balance on the receipt. We also get reimbursed for ATM fees, so this is an added bonus. Two, handing cash over is just, well, a little harder than swiping a credit card! There have already been times where I simply didn't buy something because I didn't want the cashier taking my cash! The bank I use has their own rewards system, so I won't be without my rewards, they just won't be earned using credit cards.
I also made it a goal to keep much better track of the checks I am writing and keeping those recorded in my register, which I have been very bad about in the past. This is very helpful because before, I just wrote checks without recording. The checks wouldn't clear until a month later and by then I had forgotten that I even wrote the check. Not financially smart. But, I am getting better!
I got the idea to use cash from a few friends using the "Dave Ramsey Envelope System." I did read about this but I am not sure I want to use that system just yet. I want to take baby steps and eventually plan out a strict budget and maybe use this system in the future. Right now I am happy with how my current method is working and hope to perfect it a little more with time.
Some say they don't like to use cash, because they can't keep track of what they are spending. Be sure to keep your receipts so that you can keep track. It's easy to be able to sort them at the end of the month to see what you have been spending on. Read my article here on saving your receipts.
Do you use a rewards card or do you prefer to use your bank card and cash? Do you use the Dave Ramsey Envelope Method? Please let me know if you do, and how it works for you!
Labels: rewards credit cards