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  • Way to Make & Save Money #17: Use Your Credit Card Wisely

    You can read the rest of the Ways to Make & Save Money series here.

    It’s easier to keep spending in check when you only use cash, but long-time readers might recall that cash just doesn’t work for me. I love the convenience of my credit card and I pay off the balance every month and I don’t spend foolishly so credit cards work for me. Ditto for my husband.

    What I’ve discovered, though, is that there are a few tricks to getting more out of my credit card. Since every card is different, you’ll need to check the benefits associated with your card. But here’s what works for me and my American Express Blue Cash card:

    1. Cash back. Each year, after the first $6,500 of spending, the Blue Cash card gives us back 5% of our spending on grocery, drugstore and gas. Everywhere else, we get 1.25% back. That’s a good deal for money we’d spending no matter what. (Note: These amounts might differ by card since Amex has issued new kinds of Blue Cash cards since we got ours.)

    2. Maximizing cash back. I realized that I can increase the amount I get back by spending more at the 5% stores and less at the 1.25% stores – not by changing my shopping habits, per se, but by purchasing gift cards for the “everywhere else” stores whenever possible. That means I regularly buy Target and Amazon gift cards at Ralphs (our Kroger affiliate), and spend the gift cards instead of using my credit card. There are gift cards for lots of other stores and restaurants too. That gets me 5% back from American Express instead of 1.25% (and an extra 1% or more back via Ralphs Rewards).

    3. Dispute charges when appropriate to get your money back. A couple of years ago, I placed an online order with Gymboree. I got the shipping notification but weeks later, my order still hadn’t arrived. Gymboree said they couldn’t track it so they couldn’t do anything for me and told me to file a dispute with American Express. When I called Amex, the customer service rep didn’t bother with a formal dispute – he just credited my account for the $30+ purchase and told me that if the package eventually arrived, it was a gift from American Express. I was just blown away by their customer service. Now I really feel protected when I make online purchases with my Blue Cash card, because I trust American Express not to let companies take advantage of me.

    4. Shopping protection. In addition to great customer service, the Blue Cash card offers protection against theft and accidental damage for up to 90 days from the purchase date, within limits (e.g., max of $50,000 per year). Using the Blue Cash card for purchases can also extend manufacturer’s warranties up to one year. I’ve never actually used these services but they could definitely save us money at some point.

    5. No-interest loan. When you pay a credit card balance off every month, you’re essentially deferring payment for your purchases until the payment due date. In essence, the credit card company is giving you an interest-free loan. The company still makes money, because merchants pay them in order to be able to accept credit cards. But as a consumer, I don’t pay anything extra for using a credit card so I get up to 30 days worth of interest in my bank account – which these days probably adds up to just a couple of dollars a month, but at least it’s something. (Obviously, if you carry a balance, there’s nothing free about it.)


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