Sitting on the edge of the Sonoran desert, along the main highway between Los Angeles and Palm Springs, lies Hadley’s, a popular fruit stand and tourist stop that sells, among other things, banana date shakes.
I love ’em; they’re an incredibly tasty treat — especially on hot arid summer days.
Don’t tell that to my daughter, Nina. She hates banana date milkshakes; the mere sight of them makes her gag.
What’s really funny is Nina swears that the only thing worse than a banana date shake is escargot — although she’s never tried either of them. I know.
My daughter is no different than folks who stubbornly refuse to try credit cards for the first time. They’re certain that credit card companies take advantage of consumers. They think nothing good can ever come from credit cards — nothing! — and they know this because, well … somebody told them so.
If they only knew what they’re missing.
Fiscally responsible people don’t fear credit cards and the companies that issue them. They embrace them.
In fact, savvy credit card holders actually turn the tables and use those “evil” credit card companies every chance they get.
How is that possible? Because the competition for customers is extremely fierce. It’s true! For proof, most people only have to check their junk mail.
With that in mind, I take advantage of my credit card company as often as I can — and I do so without any guilt. Here are several ways you can too:
1. Take advantage of their ludicrously large sign-up bonuses
In the world of personal finance, patience is a virtue. I remember when Marriott was courting me on an almost-monthly basis to sign up for their rewards card. At first, they were offering me 40,000 points. After six months, they had upped the ante to 50,000 points. Not long after that they sweetened the pot to 70,000 points. Hey, it’s not just the girls — every guy has his price too. Chumps!
2. Demand a lower interest rate
That’s right. If you’ve been a good customer, by all means, call up your credit card company and ask them to lower your interest rate. Odds are they’ll cave. But if they balk, tell them you’re going to close your account and:
3. Transfer your balances to a new credit card with a 0% APR
If you’re already carrying a balance on your other credit cards — and paying high interest rates in the process — then make sure you get the last laugh by finding a new card with an introductory 0% APR that allows you to transfer the balances.
4. Have customer service waive your interest charges and other fees
Awhile back I was charged $107 of interest after my credit card company received the payment after the grace period. Since that was only my third late payment in 25 years, I asked them to waive the charges. They did. Push overs.
5. Avail yourself of their concierge services
Higher-end rewards cards offer fabulous concierge services that bend over backwards to help their members with almost any request they can think of — everything from securing last-minute dinner reservations and hard-to-find concert tickets, to hunting down giant tubs of nacho cheese sauce. And they say credit card customers are the easy marks. Right.
6. Tell them you want a higher credit limit — without pulling your credit
If you need a small bump in your credit line for, say, a vacation, ask your credit card company if they’ll raise your limit without making a credit inquiry — which usually affects your credit score. You’ll have more leverage if you’ve been a longtime customer with good credit history.
7. Take advantage of their free extended warranty plans
Because it results in more business for them, some credit card companies eagerly play the fall guy by offering free extended warranty protection. Yes, free.
8. Take advantage of their free insurance
If you get in a car accident, most credit cards offer at least secondary rental car insurance that will cover any gaps in your policy. And higher-end credit cards provide other kinds of insurance too, protecting you from unforeseen events like lost baggage and even canceled trips.
9. Always pay off your credit card bills in full each month
By paying off your credit card balance in full each month, you’ll avoid wasteful interest payments that can be used for more important things like building your retirement nest egg. Oh … and don’t worry about those credit card companies — they’re still making plenty of cash off those fees they charge merchants every time you make a purchase.
Even if you use it to buy a banana date milkshake — or a plate of snails.
Photo Credit: http2007
I agree. Credit cards are only for responsible people. I learned my lesson the hard way. So, when I had the chance to transfer my balance at 0% APR, I grabbed the opportunity. After that, I see to it that the balance is paid off at the end of each month.
Good for you, Charleen!
If possible, folks who are trying to pay down large balances can rotate between different 0% APR cards before the introductory periods expire.
But be careful of transfer fees…read the fine print.
Great point, Steven! Naturally, those fees will most likely have a much smaller impact (with respect to impacts of fees vs. interest payments) if folks have very large balances to carry over.
My brides airfare to Fincon11 was courtesy of my American Express card. Paid for the fee twice over, not even using miles.
You must pay attention however!
My Marriott card comes with a annual fee of $75 — although they waive it for the first year. In theory, I could cancel the card after six months and still get to keep my 70,000 points. Not sure what I’ll do in that regard, but I’m leaning toward keeping it, assuming the points I earn more than make up for it.
one thing to help out #9 is to make sure you have a written out budget and as a companion to that, an monthly expense sheet to keep track of every dollar spent that month.
and if you hang on to these monthly expense sheets it makes doing the next year’s budget much easier and more accurate.
That is a great way to not be surprised at the end of the month, Griper. Thanks for the tip.
#3 sounds perfect!
We take the cashback rewards we get from our cards and use those to buy things like flat screen TVs and such that we wouldn’t otherwise buy. It leads to guilt free upgrades!
Me too, MB. I’ve taken my credit card company for thousands of dollars in dividend checks. And all I do is use their card to buy stuff!
(WARNING: Of course, that strategy doesn’t pay off too well if you fail to pay off the balance in full at the end of each month.)
I love Hadley’s date shakes. My Dad used to buy us those when we were kids after a weekend out in the desert. Back before trucks had air conditioning, that was about as good as anything ever tasted.
They’re still great, Bret. Hopefully, Nina will eventually get the courage to try one. Then she’ll kick herself for not trying one earlier!
Leave the cash at home – get mugged, lose the cards and cancel them when you get home later.
Hey, it’s a fringe benefit!
LOL! (I wish I could top that one, but I can’t.)
Great article! And great pointers….too bad I have no self control and don’t get to have credit cards 🙁 After bailing myself out twice I’ve found it best to just stick with my debit card, although I may have to learn sooner than later seeing as BofA wants to start charging me for using my debit card.
It’s true, credit cards aren’t for everyone. And debit cards are a good solution for folks who are easily tempted by larger credit lines offered by credit cards. I think that blows that BoA is charging folks to use their debit cards. If you have to, find a new bank, tracee.
#10. Chargebacks. Not a “rip off” as such, but being able to request a chargeback if you are having trouble with a merchant is a nice bonus too.
OTOH, I consider debit cards to be evil in-card-nate and refuse to have one. No, I’ve never tried one either. (Haven’t tried frog legs either, which has been described to me as tasting like chicken marinated in swamp water.)
I don’t like the idea of merchants “freezing” large chunks of my checking account just because I purchased something small with a debit card. Not to mention if the debit number is stolen, the results can be cascading bounced checks and a headache to straighten out. Nope, I’ll stick to credit cards, thank you very much.
You’re right, DC; chargebacks are a great service. You have a lot of leverage when your credit card company is there to fight on your behalf with a merchant who has ripped you off in some form or another.
I rarely use my debit card. And when I do I usually choose “credit” (for a variety of reasons, but that’s another post).
Len,
I’m all in with #1. Take advantage of the sweet sign up bonuses. This year I’ve accumulated over $7,500 worth of economy travel or over $10,000 worth of business class travel. All by taking advantage of the sign up bonuses.
Beautiful! I’m telling you, the credit card companies are there for the taking. What is everybody waiting for?????
Well… I’m heard too much credit card churn can lower your credit card score. But I hear a lot of things. 🙂
What do you do Len? Hang on to a small set of older cards for the longevity score, while churning a round of new cards for the goodies?
Top 5 things I do with what is left of my last Credit Cards:
1. It is great for scraping ice/snow off my car window in the morning;
2. It’s really nice to shave off a piece and use it as a toothpick;
3. Make a collage that says “I’m debt free and lovin’ it” with some of the pieces (not with those from number 4, below);
4. Clean up cat poop (I have small cats that don’t drink much water);
5. A great screw driver when I can’t find my straight screwdriver…
Naw, now seriously, I don’t have credit cards. I paid the ones I had off every month for 18 straight years, without fail. I was one of those “responsible” people.
I have no desire to have one again. It’s my choice, and I am loving every minute of:
a. Not getting screwed with;
b. Not having my identity scanned by bad folks;
c. Not worrying about the time I lost my purse at the store – there was nothing in it very interesting;
d. Total lack of understanding what day my credit card bill is due and how it changed that month.
Ad nauseum.
Spedie
LOL! Good stuff, Spedie! I appreciate you desire not to own a card. Have you thought about getting the cards just to take advantage of their sign-up bonuses, and then throwing them in a drawer for ever more?
It truly is amazing, isn’t it. This weekend I read a claim by someone who said they regularly sign-up for cards with these ridiculous bonuses, cancel the cards, and then reapply a year later and claim the same ridiculous bonus again. And then do it again … and on and on. Why not, right?
Just curious – what does this do to your credit score? I have read that it is not good to cancel your cards even the ones you don’t use. Would love your thoughts!
Good question, Karen. I can only guess based upon what I know. By canceling a credit card you reduce the amount of available credit you have, which is a factor in your credit rating.
My guess it depends on how many credit cards you have. If you have, say, $100,000 worth of available credit spread against 10 cards, the impact is probably minimal. On the other hand, if you only have one or two cards with, say, $10,000 available credit, the impacts may be higher.
Naww…not me…been there, done that. I take a special delight in planning out all my expenses, even big ones, ones that are many thousands, or tens of thousands of dollars…
I like living debt free, totally – and the stress that is relieved by it is..gone.
I do not partake in credit cards…I tried to make light of it.
It is truly freeing. Credit cards will never give you that….it is a mind game with “me” that I overcame, no matter what rewards. My reward is within myself.
This, for me, is debt free, and living it.
But, I am weird, and I know it.
Lovin’ every minute of it. But, heck, if you like your rewards for credit cards, so be it, I still value many things you say….just not all of them, for me.
Spedie
Hey, how can anybody argue with that? (Not that you’re weird, the part about you enjoying living debt free.) 😉
Seriously, I totally understand where you’re coming from, Spedie.
And you know what else? The Honeybee values almost nothing that I say. So I won’t complain that you value many — if not all — of my points of view. 😉
I’m all about straight-up cash back rewards. I always pay in full and while I only average about 2% back depending on cards and categories, that’s a decent chunk of change each year tax-free!
I’m with ya, Darwin. I prefer the straight up cash back rewards cards too. The jury is still out whether I will try racking up the Marriott points in place of the bucks, at least for a little while. I need to run some numbers and see how much a marriott point is worth in terms of real money.
You can use the Marriott points for hotel stays, which I usually do. But you can also use them at the Marriott website to shop for merchandise. I didn’t have enough points for a stay, and I didn’t want to lose them, but I did have enough to get a gift card to Lowe’s. There are other merchants on the site too.
@ Darwins Money:
The reason it’s ‘tax free’ is because it was your money to start with.
That said, if a business will discount the entire merchant fee they pay if you pay cash, you’re better off to pay cash. If no discount for cash, you’re better off to get at least some percent of the cost back in a reward (assuming you can use the reward) because the fee is built into the cost of the item you’re buying.
I avoid using my CC as much as possible, but when it comes time for a big purchase (such as my recent splurge on a snowboard + accessories) I busted it out for the cashback. I know I could probably rack up the cashback using it everyday, but I prefer to limit my use as much as possible. I don’t spend much, so I only get a check once in a while. It’s still nice to get a check though.
It sure is nice to get a check. It’s essentially free money!
Many banks and credit cards offer free life insurance, it’s only about $2k or $3k. Their spin is to convince you to buy a policy. I have about 10 free policies (stored in safe deposit box). / Tony
Interesting! Thanks for sharing that tip! I did do a little more research after you left your comment, and it turns out American Express, VISA, Mastercard, and Discover really DOES offer free accidental death & dismemberment (AD&D) insurance on some or all of their credit cards. How did I not know that??? Is that what you have?
This is a slick way to get the most out of your credit card. Thanks for the great tips Len. Everyone else’s comments have been helpful too! I wasn’t aware of the free insurance policy. Can I just call my cc company to ask about it?
I’m sure you can call your credit card customer service number on the back of your card, Barnabas.
I got divorced about 2 years ago. Previously, my husband had a bad business deal and maxed out all of our credit cards, which he is not able to pay. In our divorce agreement we stated that he is responsible for the payment, but in the end those were in both of our names and my more than perfect credit score is now ruined. I was wondering if there is anything I can do (other than pay off his debt and cancel the cards) to reestablish my credit, despite the unpaid cards.
Carmen you didn’t cancel the cards immediately? Cancel all the cards NOW to avoid ex husband running up MORE DEBT in your name. You can worry about the existing debt later but stop him from adding more debt. You have a couple of choices. You can pay off the debt, or you can pay nothing on the debt (No in between!) and in seven years the debt will be written off by the companies although you may be on the hook for income taxes if the debts are forgiven and the person / company owed the money informs the Federal and State Governments (I would!) that in effect you have been GIVEN this money by the debt being cancelled. I don’t know all the details but you need some credit counseling to explain to you the consequences of both options. Next time you get married make sure each of you has credit cards in your own name only. Please note that this isn’t “his” debt but your debt also. Divorce decrees do not outrank your name on the credit card. Your credit will be a shambles for 7-8 years and then you can rebuild your credit rating.
I always rent the car or purchase airplane tickets with the credit card BUT with the cash on hand, so at the end I pay full with cash but earn the points. It’s so sweet.
Nice one! Use your CC’s as free money for a month and never pay them a fee.
You got it, Sam!
BTW Len, where’s that retweet button?! I’m still blind.
I know… I can’t afford my own IT guy like Dr. Dean.
We need to milk the Doc!
Asking a credit card company to raise your credit limit is smart. You FICO score could go up if you are using a smaller per centage of available credit. That’s easy to do if your credit level has been raised.
Hey Len,
On the subjects of chargebacks I believe you can only do 2-3 a year so don’t go around buying expensive stuff and then doing a chargeback on everything just to game the credit card companies. Also, you can link your credit card to Paypal and do a chargeback through Paypal so you have an extra added security barrier.
Also, as a side note be careful about asking for an increase credit line because this will cause them to pull your file, resulting in a hard inquiry which will hurt your score in the long run.
Garen
I love your tips, and have actually used some of them myself. There is no need to fear credit cards as long as you are responsible! If you have no impulse control, then maybe you don’t need to have one.
I’m making big payments on my chase card but they are telling me I owe more than what I have charged is tjis possible? ?
No offense to anyone, but we don’t use credit cards, except on vacation, and let our credit union know they should expect transactions from a particular place at a particular time. The hassle with credit cards is not worth the points or anything else…we get discounts many other ways, and we don’t fly on planes anyway. I might carry 20 dollars in my wallet…if you don’t have the money or the cards, you don’t spend. We are retired with no debt, house and autos paid for…it works for us.
Len, I’m so happy I found you! I love your ideas and your writing style.
Regarding how credit cards can be a good thing: I use a single credit card to pay some monthly bills (home phone, cell phone, cable TV, internet, gas/electric, trash pickup, medications, gasoline, etc.) where creditors don’t charge a fee to pay with a credit card. I pay the credit card in full every month (so no finance charges). I have the credit card linked to Amazon.com and I have been able to “purchase” many items with the points — carpet shampooer, vacuum cleaner, coffee pot filters, food extractor, hand-held stair vacuum cleaner, yard waste bagger for lawn tractor, kitchen stand mixer. And that is not a complete list. These are good quality item, too. Also, the cable company gives me a point for every dollar spent with them, ( I don’t spend any more than my regular bill) and I have used the points to get the extra HDMI cables that we needed. I have also redeemed credit card points to get (no out-of-pocket cost) a cross-cut shredder, zero-gravity lounger, coffee maker, flameless candles, a second vacuum cleaner for downstairs, USB drives, and a 42-in Samsung Smart TV.
If you are disciplined enough to use a credit card in this manner, it pays off big time. You just need the patience to let the points accumulate.
Agree with your strategy. I’ve found that I can even pay for my car and health insurance with a credit card, without a fee, and those are big ticket items–so more cash back. If you time it right, you can pay the bill the day after a credit account closes, and get an extra month’s grace on paying the bill. Of course, you have to pay your bill in full every month.
Hey there, Len! I discovered your blog after reading this on msn. Thank you for the post.
great article! thanks
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That it does.
Well, Len, I think that a libertarian-leaning fellow such as yourself would point out a few more cons to the whole credit card thing. Here’s a start:
– Increased price of everything. All those merchants who have to pay the credit card companies a fee aren’t paying it out of the goodness of their hearts. They have incorporated it into the price of their product, so … everything costs more. It used to be that some merchants would give you a price discount for paying in cash. I haven’t seen that deal in a long time.
– Privacy. It galls me that somewhere out there in the netherworld is a list of everything I have ever purchased with a credit card. That list gets sold again and again. What galls me the most is that I’m certain it makes its way to the government. I shudder to think of what they can do with that information.
Hi, Gee! I totally agree with you about the privacy issue — the lack of privacy annoys me too, which is why I will forever be opposed to the elimination of cash.
I have to disagree on your argument concerning increased prices for everything. There are many places — perhaps even a majority — that offer no discounts for cash.
Number 8 – taking advantage of free insurance – is priceless. I once rented a car and ended up in an accident. Luckily, nobody got hurt, but I had waived the rental insurance. I had no idea my card provided rental coverage, so when I found out it did, I got a huge weight taken off my shoulders. Talk about a close call!
I hear that if you play the cc game and accumulate a lot of cards, then want to get rid of some of them (too many is apparently bad for your credit score) – always keep the oldest cc and get rid of any of the others. Supposed to help your credit rating.
I am not sure the number of cards is a real driver, Frank. What’s more important is the ratio of available-to-total credit on those cards. As an example:
It is better to have 10 cards with $100,000 total credit and $10,000 worth of charges (90% credit availability) than, say, one card with $1000 total credit and $900 worth of charges (10% credit availability).
I LOVE, my United Airlines credit cards! The balance gets paid off twice a month and I never pay interest. When someone tries to cheat me the credit card company has listened to my story, viewed my paper proofs that I did purchase the gas in question for the rental car which I returned with gas tank full, and refused to pay the attempt to double dip by Sixt Car Rental company. I often upgrade my flights to Polaris with miles and some money. If you don’t have the impulse control to spend only what you can afford, and to pay off your balance each month, then don’t get a credit card.