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Wednesday, August 27, 2014

75. Credit Cards, Rewards, Dave Ramsey, etc.



People tend to spend more when they use credit cards then when they use cash. Regarding identity theft are credit cards more dangerous or less dangerous than debit cards? Typically debit cards are considered more dangerous as the money comes out of your account instantaneously. That said…

Like others we use credit cards to buy things we’d normally buy: groceries, gas, bills, etc. We enjoy rewards primarily for cash back now - Discover, CapitalOne, and Amazon. We pay our credit cards balances off in full every month. 

We get rewards through Discover card with the 5% cash back every quarter. We also get 1% cash back on all purchases. We can get gift cards (through JCPenney, GAP, Old Navy, CVS, AMC, Groupon, Olive Garden, Applebee’s, Boston Market, Macaroni Grill, etc.) or we can use the cash back to go directly to our payments. As a side note Discover also provides a free monthly credit score. I'll post on this more later. There is no annual fee on this card.

We have a CapitalOne Quicksilver Visa that allows us to get 1.5% cash back on all purchases.  There is no annual fee on this card.

We have an Amazon Visa card that gives us 3% cash back on all Amazon.com purchases.  We also get 2% cash back at gas stations, restaurants, and drug stores. Finally, we get 1% cash back on all purchases.There is no annual fee on this card.

We have a Khol's card which gives us 15-30% off coupons that we use occasionally when shopping for clothes. We also use our Target card for 5% off purchases at any Target store. 

Dave Ramsey says a lot of things. Some of it is good and some of it is not so good. He has great advice about getting out of debt and the 7 babys steps are a good system (emergency fund, budgeting, debt snowball, invest 15% towards retirement, save for kids college, pay off home early, build wealth and give...). His advice is not so great for those who are disciplined in paying off their credit card bills every month. 

Let me explain. The issue is Dave Ramsey assumes that everyone who uses credit cards is not disciplined with money and will carry a balance. People who can’t handle money well (those who carry a balance or treat a credit card like an emergency safety blanket) shouldn’t have credit cards. I agree with him there but not everyone is irresponsible with how they use credit cards.

My advice: If you can't be disciplined enough to pay off the card every month don't have a credit card. 

We get about $400-600 a year in cashback rewards alone. We think they're worth it!

What do you think? Are credit cards worth the risk to you? Do you pay off your credit card or cards every month? Leave a comment!

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