As I have mentioned before, my wife and I are huge advocates of using credit cards to your advantage. As long as you are diligent enough to pay off your credit cards each month, you can earn money from cash back rewards. If you fail to pay them off each month, you will owe the credit card company high amounts of interest and the benefit of cash back rewards is wiped out.
My wife and I have a very intentional plan when it comes to spending our money. We try to minimize our daily expenses without having to spend a lot of extra time cutting coupons. This stems from our commitment to a frugal lifestyle. Yet, we are also busy with our hobbies and school activities that we can’t afford the extra time to perform too much savings. Just like anyone else, life is a balance between what you want to do, what you can afford to do, and what you have time to do. You can’t do everything, so you have to pick and choose your battles.
Using credit in a smart way not only helps us save money and time, but it also is the means by which we track our expenses. Talk about a Win-Win!
How and Why We Plan our Spending Around the Discover Card
My wife and I plan out which credit card we are going to use when paying for everyday expenses like gas, restaurants, vacations, based on the rotating cash back rewards on the Discover It Card. Some may think I am crazy, but it makes the most sense. Every 3 months, Discover offers 5% cash back on different categories. In the summer, it is usually gas and other categories include restaurants, hotels, airfare, etc.
So, every couple of months we review the featured categories and determine which card is the best to use for what. We only have to do this a 3-4 times a year and it only takes a few minutes. Most of our other credit cards have a standard 1-3% cash back. We think of Discover as the “trump card” – whenever we got to buy something within the featured category for that designated time, we make sure to use the Discover It Card.
The reason why we plan which credit card we are going to use based on Discover is because 5% cash back is the highest reward on any credit card that I own (and have heard of). Here’s how I think of it: If I am going to use a credit card to pay for something, should I use a card that will give me 5% of the purchase back or should I use one that will give me 1%-2%? It seems simple, doesn’t it?
You Can Take Advantage of the Discover Card Rewards Too
Over the course of the year, my wife and I earn somewhere between $400-$500 in cash back rewards with our various credit cards. We make sure not to buy more stuff just to get the rewards (that would be pointless) and only use it on everyday items that we need. While you could limit yourself to a cash-only budget, using credit cards responsibly helps you beat the system and get a few extra bucks.
The application to apply for the Discover card is quite simple. When I was in college, Discover was one of the first credit cards that I got. I started out with a VISA from my local bank and then moved on to get a Discover card because of the better rewards. If you don’t have a Discover and you have been looking for a way to save more money, this is a great way to save money. Why would you want to pass up on the opportunity to get 5% back on rotating categories?
photocredit: Andres Rueda via Flickr