Frugal Friday~Cash back Credit Cards!

    
Cash back Credit cards. Have you heard of them? What are they? Are they worth it?  It seems that every store out there has a rewards card of some kind, some being better than others.  Why shouldn’t the credit cards get involved too!  Did you know that there are several cards out that that offer rewards?  I have been bit by the saving/rewards bug/addiction,  so I thought I would share some of the things that I have learned with you.
     A few years ago our church took part in the Dave Ramsey Financial Peace program.  At the time we had a mortgage, home equity loan and a car payment.  That is all!  We have never really been in a huge debt to credit cards.  We were struggling with how to make a budget work for us.  I think it is funny to admit that.  It seams so easy you make A so you can spend X and save Z, right?  For whatever reason we just couldn't get it going and stick to it,  so we took the class.  I think that it is a great program and if you have debt and follow his plan you will be debt free with discipline.  I have to say we learned to do that budget and we stuck with it!  Now we are almost totally debt free with just a mortgage left.  YAY US!! 
    That being said, we did it using a credit card!  I have to disagree with Mr Ramsey when he says you shouldn’t use credit cards.  Let me first say, CREDIT CARDS ARE NOT FOR EVERYONE!, however when used properly they can be a great tool as well as a budget extender.  When you open up a credit card you need do it with the mentality of I am going to pay this off in full when I get the bill.  IF you cannot pay off your card each month you shouldn’t use it! If you have to pay interest on your balance it isn’t worth it.  You also need to watch what you spend overall.  I still make a budget for the grocery/monthly shopping.  
     Mr Ramsey's program uses cash and you put how much you have budgeted for each area in an envelope.  When the envelope is empty you are done with spending in that category! I have to say this thought scared me in the sence that if we still had a week in the month and had no grocery money what would we do?  We took the information we received in the seminar and used it to put a system together that would work for us.  
    This is what we have done.  We have a spreadsheet in the computer that we use as our envelope system that Mr Ramsey talks about. We have an amount for each category and even an

misc category.  When we spend we subtract from that column.  It works for us.  It is said that you spend more when you use a credit card because you don't want to charge 2.00.  In the beginning we were that way.  We would go to the grocery for a couple of loaves of bread.  The total would come to a few dollars so we would add yogurt or chips and fruit to make it seem like a better amount to charge.  That, for obvious reasons, will kill the budget in the first couple of weeks!  So now if I need to charge 2.00, I charge 2.00.  I try to make a list and menu when it comes to groceries and then stay out of the stores in between.  This is what works for us.
     So what is the cash back credit card thing? First of all, as stated above if you cannot commit to paying your card off each month, DO NOT DO IT!  Cash back credit cards can offer many things as rewards:  cash, points to trade in for things, merchandise or travel discounts~to name some of them.  I think most credit cards offer something now you just need to see what would work best for you.  
     One thing you need to check out when opening a rewards credit card is, a fee.  Some credit cards have an annual fee to keep the card.  I would shy away from those in a heart beat.  Why would I want to pay to carry a card?  So many cards are free! 
   How does this cash back thing work?  It is going to depend on the card.  We have, for example, the Bank of America 1-2-3 Rewards.  This card will offer one percent cash back on everything, 2 percent on groceries and 3 percent on gas.  I know that Chase has a freedom card that offers 1 percent all the time, then every three months you get a different set of business you can get 5 percent, like groceries, gas, restaurants etc.  There are usually limits on what you can earn as well, like up to 1500.00 in purchases.  As you use your card your cash back will accumulate and add up!
     We have had a true cash back (versus points/merchandise) for about 8 years now.  With our cash back we can have it either sent to us in a check or placed

on our account as a credit.  We choose the credit option once we purchase something we want to use the cash for.  For example this past Christmas we purchased Kings Island Passes for the kids and us.  I made the purchase then had the cash put on the card to pay for it.  We have also purchased 2 cameras and a computer with our cash back as well as paid the boarding bill a few times for the puppies when we have traveled!
     Credit cards make it real easy to get into debt.  when you spend more than you can pay off it is hard to get out of debt.  You can quickly forget how much you have spent when you are not watching your cash flow.  When used properly, though credit card can be a big help!