Last week I booked a $700+ per night hotel in the Bahamas for 4 nights over Thanksgiving break. Before you crucify me as a bad financial example, let me share how much I’m actually paying. Thanks to the Chase Ink credit card and a 70,000 point offer that was available last fall, we will only be paying $155.23. Yes, that’s $31.05 per night for a luxury hotel room on a beach in the Caribbean. We plan to fly there using Southwest points and a companion pass. I haven’t booked those tickets yet, but it looks like the cost will be around $300 in taxes for the three of us. This is why I love credit cards.
I Am Smarter Than Credit Card Companies
As I’ve written about many times, we used to be dumb when it came to using credit responsibly, running up over $30,000 in credit card debt before we graduated from Debt City University. While I don’t necessarily remember those times with glee, one thing I can say about digging deep to pay off the credit debt is that there is ABSOLUTELY NO WAY we will ever pay a penny in credit card interest ever again.
I am not tempted to spend more than I need to spend. I do not feel the need to buy more stuff. I am not terrified of opening my credit card bills. I am smarter than credit card companies.
I Still Have Expenses
While we are buying less consumer stuff than ever, we still have some pretty big expenses. I’d love to not have them at some point, but they are a necessary evil for the time being. Just to practice optometry this year, it will cost around $2000 in license and insurance fees. We are in the process of renovating a rental property that will be several more thousand dollars. Our life insurance premiums will be due soon. Jim has to pay for some of his business travel costs and submit the receipts for reimbursement. We buy groceries and fill up our cars with gas.
All of these expenses are unavoidable to maintain our basic needs, careers and peace of mind. If I’m paying them anyway, I’d love to get as much money back as possible. By studying the best reward cards and choosing ones that fit our budget and plans, I’m able to do that.
But I Don’t Trust Myself With Credit Cards
If you don’t think you can use credit responsibly, then don’t get a credit card. If you aren’t sure, I’m not trying to talk anyone into applying for credit, but there are some ways to avoid overspending.
Give Yourself A Low Credit Limit
Call the credit company and have your credit limit lowered to what you’re comfortable with. This could lower your credit score if you intend to carry a balance, but if you pay off the balance in full every month, it doesn’t have much impact.
Pay Your Bill Immediately
After using a credit card, log in the next day and pay the bill. As soon as the charge posts, you can pay it off. You don’t have to wait until the end of the month.
Don’t Carry The Card With You
Leave the card in the freezer or in your sock drawer, wherever you need to keep it out of sight. You can use the card to pay off bigger expenses to take advantage of rewards and pay your normal monthly bills with cash or a debit card if that makes it less of a temptation.
Why I’ve Had a 180 Turn About Using Credit Cards
Once you’ve taken a low cost vacation funded by credit card rewards, it’s hard to go back to retail price. We would still take trips without reward points, but it would be short road trips instead of flying to San Francisco for spring break, Europe in the summer, and the Bahamas for Thanksgiving.
I paid interest to credit card companies for years. That’s what they want, but I know people can be smarter than that. Maybe you have no interest in travel, but if you would like to go on a trip and don’t want to spend much money, reward points are the way to go.
To me, avoiding future use of credit cards because of past mistakes would be like avoiding the stock market because I made a bad investment 10 years ago. I’ve moved on and have educated myself to know better now.
(The links in this post are not affiliate. I really just want everyone to be able to travel for cheap!)
What is your view on using credit cards for rewards? Am I off base to think reformed debtors can fly straight? I know some of you disagree about credit cards, so let’s hear about it!