How I Pay for My Life With Credit Card Points

credit card rewardIn our Money Mic series, we hand over the podium to people with controversial views about money. These are their views, not ours, but we welcome your responses.

Today, Greg Haney, a financial analyst, shares how he takes advantage of credit card points to pay for as much of his life as possible.

I grew up in a small town in Washington, the firstborn of two overprotective and amazing parents. My father works in sheet-metal construction, and my mother is the local high school librarian. They provided a household of humble means, and we were content to live simply.

RELATED: How I Simplified My Life to 100 Things

As a kid, my parents taught me the value of a dollar, and I saved everything I could. I was fortunate to have received an allowance from my parents in return for completing chores: $5 a week in elementary school and $10 a week in middle and high school. At a young age I questioned why other children were given higher allowances—a classic jealous-of-the-rich-kid situation. My parents explained that giving me less would force me to spend it more wisely.

I began saving money for college in middle school. Through a combination of scholarships and my savings, I was able to graduate debt-free from the University of Washington.

Getting My First Card

My parents are from an older generation that doesn’t fully trust the banking system or credit card companies. They had one credit card when I was growing up, but hardly used it in favor of paying with cash or check. So I never had a credit card of my own until college.

RELATED: 3 Steps to Getting Your Child a First Credit Card

I signed up for my first credit card my freshman year as I was interning full-time at a local bank on top of a full load of courses. When I received the card, I made a rule for myself: Pay off any balance in full each month. That way I would avoid interest charges by simply not spending more than what I had in the bank.

My first card was the Citi Dividend Platinum Select, which rewards me with 1% cash back on every purchase. Because I paid my balances in full each month, I began to realize that the cash back was essentially free money I was earning for buying things I needed anyway. And so the seed was planted.

  • Jasanna

    Thanks for posting this! I’ve actually been just looking into this type of living recently. I’m trying to figure out a way to pay for rent with a check, by credit card. Any tips?

    • Meghan

      If your landlord is willing to set it up, Amazon Payments is awesome. We use it with our renters. They can pay via credit card or bank account and the money gets to us the same day

    • Christina Kim

      Try rentshare.com, the fees are as follows:

      $1.95 fee for bank account payments
      2.9% fee for credit card payments

      • LeeLee

        It’s likely that you won’t see point rewards on rent that are worth the 2.9% fee for charging it, so be very careful with this.

  • catjsum

    this is a guy after my own heart! didn’t know about lastpass or walla.be, though – downloading now :)

  • Dylan

    I love this article – I get so frustrated with the misconceptions about credit cards, especially from people who say “I would never use a credit card, I don’t want that debt and fees!” Credit cards are an amazing tool IF you can use them correctly. If you aren’t disciplined to pay it off every month, or if you have a hard time only purchasing within your budget, then you probably shouldn’t use credit cards. I am not as hardcore as this author – I’m happy to sacrifice some potential savings for the ease of only juggling two cards – but I make it a point to always make sure I’m paid “something” in return for whatever purchase I make. Those self-righteous cash and debit card users are missing out – I paid for all my Christmas purchases last year with my Discovercard cashback bonus.

    • LeeLee

      I’m with you. I’m not organized enough to juggle so many credit cards, but I put everything on my one cash back card. I usually save up my points and spend them all for Christmas time, so that I can afford to be a little extra generous to my family.

  • Dana

    My fiance and I have been employing this strategy for about 4 years, though not nearly to the level of detail and dedication as the writer! Keeping track of multiple cards for different types of purchases seems a bit intimidating. But I’d love to see a breakdown of which cards he uses for which purchases.

    • Greg Haney

      Dana I’d be happy to share my spreadsheet. Send me a message at gregoryhaney.com and I’ll reply with attachment.

      • Joanna Garcia

        Greg, this type of spending and finding new ways to earn rewards is right up my alley! I’ll be starting graduate school in the Fall and have been racking my brain for new ways to earn more when I spend. I shall be contacting you as well for a peek at that spreadsheet. Thank you!

  • Sherry

    I’m not a credit card user! All of his info is stored on his smartphone and I would never do that! My bank offers cash back on purchases through my debit card use so for those like me you can still receive rewards by using the cash in your bank and this still remain debt free! You do not have to pay the cash back like you do with a credit card and if you ever lose your job this foolish way of living will not put you in debt or destroy your credit! Suppose the author gets sick or loses his job! What then? There are smarter ways to maximize savings and still live debt free during these uncertain economic times!

    • Kate

      The author said multiple times that he pays off his balance in full EVERY month. Which means he is not in debt. He has the money to spend, he just spends it by using a credit card, and maximizes the value.

    • Dylan

      You don’t seem to understand what the author is saying. Let’s say he gets $2000 a month in paychecks deposited in his bank a month, and then charges $1500 on his credit card that month. He pays the $500 balance on card #1, the $600 balance on card #2, and the $400 balance on card #3, probably earning about $75 (5%) in the process. If he loses his job he there is no balance, no debt – because he paid it all off in full.

      Debit cards are no safer than credit cards – and my credit card actually offers much better fraud protection than my credit card. If my debit card is stolen and my account wiped out, I’ll likely get that back but it might take awhile. If my credit card is stolen, I never have to pay those charges in the first place.
      If you don’t want to use credit cards, fine, but please at least understand how they are used! There is NO DEBT and NO INTEREST if you pay it off on time – which can often be as much as 7 weeks after you purchased something – thereby giving you more time to afford the purchase anyway.

    • LeeLee

      I don’t understand the rantings of this comment. He only buys what he can afford to pay for with cash. The only difference between this and using a debit card is that using a credit card allows you to earn interest on the cash you’re waiting until the due date to pay out.

    • Nikki Eugor

      Sherry, I don’t think you read the article right! This is a great read! In fact, I think it’s a great idea! He is debt free! The author pays everything off right away. He’s working smarter! Not harder! Exactly what one needs in these tough economic times !

    • Tania

      He is debt free. As he pays off his balance monthly, it would appear he doesn’t charge more than he could pay for in cash.

  • Sherry

    When I made a reference to the author, I was referring to the author of this post.

  • NKSL

    I grew up in a credit-card family but was always taught to pay the bill in full every month and not buy anything I didn’t already have enough in my checking account to pay for. I have about 10-12 cards now and easily earn $1500-2000 per year in rewards (though I don’t track things as carefully as the author does). Another tip/trick is to shop online through links from the credit card and earn an additional 5-10%. I do this also with online retailers that offer in-store pick up, so I can earn extra rewards and still get what I need right away. Credit cards aren’t right for everyone, but if you can control them, you can beat them at their game.

  • apt1

    this strategy works well until you are hit with an unfortunate financial situation, such as unemployment or big medical bills. It is extremely easy to get yourself into a whole. My husband and I are living proof. We employed this strategy for years with great success. We were hit with 6 months of his unemployment, problems with a child’s drug addiction, and various other middle aged financial challenges. Bottom line, it is very tempting to finance your life when you are hit with an emergency, and the whole mess can snowball. Just be very careful, folks.

    • Sasha

      That’s why it’s important to have an emergency fund that will last for 3-6 months.

  • LeeLee

    I loved this article. It’s a smart way to handle your finances if you have the willpower to not spend more than you can afford to spend. Moreover, credit cards offer you so much more protection that cash or even debit cards.

    However, this doesn’t work for everyone. My sister-in-law, for example, can’t mentally link the swiping of the credit card as the expenditure of her cash and will just keep spending. For her, having a credit card is a bad idea. For others, though, it is wonderful. As long as you can be honest about your spending and your limitations, this is a great opportunity to make money just by continuing your normal spending habits.

  • Kooz

    This is exactly what I do currently but I noticed a pattern in my spending. When the cash back goes up my spending in that category goes up. Even though I pay off the balance each month, I’m still wasting money. Has anyone experienced this? This makes sense considering how much credit card companies invest in changing the subconscious thinking of consumers with the reward programs.

    • Bonnie

      If you’re decreasing spending in other categories of your budget to increase spending in that one category, I don’t see the problem. If you’re still spending the same in other categories & going over-budget in the category w/ the high cashback, then you’re not budgeting properly.

  • mara

    I like this strategy but it is definitely not for everyone.
    First, you need to already be spending less than what you make (which disqualifies a big percentage of people). Second you would need to have a fully funded emergency fund so when a rainy day come you have some cash and you can put the credit cards away until everything goes back to normal; I consider this issue the most dangerous one for the average person.

  • Krystal

    I commend the author for his discipline with his 13 credit cards. I am, however, disheartened that Learnvest chose to publish this article. The author is only 24 years old and has a system set up that most people would not be able to comprehend or implement. Most people drown in credit card debt and are unable to be as diligent on tracking spending as the author. I would exercise a humongous level of caution for anyone thinking of paying for their lifestyle with credit card rewards. It is so incredibly easy to accrue debt using this approach. Why do you think credit cards offer these rewards? They know that eventually, they will make their money back times 100…Learnvest, this kind of article needs to be published with a disclaimer…

    • Guest

      There is no one size fits all when it comes to personal finances. I think it is great to have perspectives from all angles showing how others handle there finance. I would hope that someone that has credit card debt or spends more than they make each month would realize this isn’t going to work for them.

      I have multiple credit cards and maximize the benefits they offer. However, my credit card balance is paid off each month and never exceeds the amount available in my checking account. I also have savings and an emergency funds account available if an emergency expense does occur and it would exceed my checking account but I haven’t run into a situation I needed to use it yet but I’m just as covered, if not more than someone that only has or uses a debit card.

    • Amy

      I am also impressed with this young man’s Type-A spreadsheet mindset and ability to see a real opportunity. But let’s be honest, the vast majority of us a way too busy with life to track and manage this sort of endeavour. A few late $35 fees or interest charges and you’ve wiped out your gains. Who really pays for these rewards is the businesses we patronize–not the credit card companies. If you own a business, you’ll see a much higher cost for taking rewards cards than non-reward ones. (But today, most cards offer rewards of some sort.) I own a vacation rental business and by encouraging payment by check, we save more than 3% in credit card discount fees we pay with every transaction. That may sound small but it means I don’t have to raise rates to cover that expense…which keeps us more competitive and our guests get a better deal. In the end, nothing is free…though the credit card companies would have you think that.

    • Sarah

      There is a disclaimer….
      “In our Money Mic series, we hand over the podium to people with controversial views about money. These are their views, not ours, but we welcome your responses.

      Today, Greg Haney, a financial analyst, shares how he takes advantage of credit card points to pay for as much of his life as possible.”
      Right at the beginning of the article

      • Krystal

        That is hardly a disclaimer, my friend…

        Also, I wonder why more people aren’t doing this if it is such a fabulous idea?

        • Megan

          I think More people than you realize are doing it which is why it is such a great article/perspective. It’s just the people in debt or who can’t manage their credit usage that don’t understand it.

        • Fura Gray One luv!!!!

          We don’t even know who doing it are not. Even though everybody opinion sound endeavor to me, as much as , if they are a disclaimer of abandonment or relinguishment credit card holder. Its still is wonderful to read everybody status of their on opinion. I will use everybody opinion as a statistic. One luv!!!!!

    • Tania

      True but the point of the money mic series seems to be present a controversial viewpoint so it’s not meant to work for everyone. I find these types of articles interesting as it sparks out of the box ideas for me. I may never follow one 100% but it always makes me think and the article is more engaging than the straight personal finance dry advice. That said, I’m the type who can’t handle having alot of available credit so wouldn’t do this exactly but it does make me realize I should have a card that offers rewards for my one or two cards I do hold and use to pay for online or travel purchases.

    • Sarah

      “Most people drown in credit card debt.”

      Most? I think that’s taking it pretty far. And those of us who can manage our money responsibly very much appreciate these kinds of articles. If it won’t work for you, that’s fine, but some of us would appreciate MORE articles like this and fewer about paying off $70,000 in credit card debt that we don’t have.

  • Matthew Gordon

    Great article, and shouldn’t even be seen as “controversial”, although I think 13 credit cards is a bit much. I go with a couple and leave it at that. If you want to spend your time tracking the 11 others, I tip my hat to you.

    “At a young age I questioned why other children were given higher allowances—a classic jealous-of-the-rich-kid situation. My parents explained that giving me less would force me to spend it more wisely.”

    I’d love to be a CHRO telling that to employees. You’re not being less than market wage – you’ve just got money comparisonitis! We pay you less so you can spend it more wisely.

  • kgal1298

    This reminds me of Chris Guillibeau a Travel Hacker I follow. He uses multiple cards and uses the points for travel. I wish I could apply these methods, but I’m still trying to clean up my credit from college. All my accounts are paid and on time for the past 4 years, but I have things in collections from my horrible college years. I’ll get it fixed eventually, but good job on keeping track. I wish my parents would have taught me more about financing.

  • Maureen

    I started to try and live like this several months ago but found myself bogged down by what I could get as a reward and what was the best option – I wound up googling all the rewards options to see the cash value. I started a spreadsheet to cover exactly how much I should spend, and where, and how much of each thing I was actually saving money on, and whether or not I’d benefit more from requesting literally cash back in the form of checks, or gift cards, or… Once I realized I had spent literally hours of my life doing this and I was still in the process of developing the system, I decided it was a waste of time (for me right now) and I could do better by spending my time on hard numbers, not soft ones. I’m glad this article reminds me of the fun I can look forward to when budgeting things once my financial situation feels a little more stable. For now, I need to focus on much grittier budget priorities. In six months, however, maybe I can start maximizing rewards. I think this guy should package this as a one-time service and sell it – it would definitely be worth it to people to save the 10-30 hours of time this type of thing really is going to take, and a one hour seminar on how to maximize card/benefits would suffice for teaching people how to suss out new offers. If it were a product, I’d probably buy it and still save money!

    • Mary Chouinard

      I have been using reward cards for several years now. Started out before 2005, when credit was still easy, but I was $50,000 in debt – vehicles and credit cards. Used 1 new major rewards credit card for my living expenses only – phones, utilities, groceries, cable – anything I usually paid for with cash. I paid off the balance each month, began concentrating on paying off highest interest loan/credit card until I paid them all in full. I already had 6 months of living expenses + in savings. 5 years later I was debt free. I continue to use the rewards card for all the expenses I use to pay for by cash or check/debit card. A side benefit to this method is that I learned how much I was spending, and on what, in each year. I’ve learned how to budget better from it. The draw back was only that it was harder to double check my rewards credit card each month than it was to balance my checkbook! lol Otherwise, I really didn’t put that much time into accounting.

  • Sarah Kyung Jee Son

    This is a great article! I also pay my credit card balance in full every month, and I get cash back. I just discovered that I get back free money for essential, planned purchases. When I spend my credit card, I log onto my online banking and put away the exact amount I spent into my savings account. When the time to pay my credit card comes, I simply put back all the money in my savings account to my checking and the money is there for the credit card auto-pay. Because I do this, I know exactly where my money is going and how much I spent. I don’t spend my savings account as a real “savings” account because the interest is so low.
    Anyways, Thanks for the article! Very encouraging!

  • Nikki Eugor

    The amazing thing about Learnvest is for many authors and individuals to share their experiences in monetary aspects. Each article is written to share thoughts and ideas. What may work for one person, may not work for you. I just find it interesting that many are able to negatively comment on someone sharing their way of getting extra cash to fund fun things like vacations for a small yearly fee or no fee at all. While those that have bashed Greg’s way of life living debt free. He’s laughing all the way to his paid for vacation by cash rewards from credit cards.

  • Bonnie

    Whether the PenFed Rewards VISA or the AmEx True Earnings is better for gas depends on the price spread between Costco Gas (which only accepts AmEx) and the next cheapest gas in your area. If you have a gas station near you with similar prices to Costco Gas than the Penfed VISA is better. Where I live, though, Costco Gas is almost always at least 15 cents/gallon cheaper than the next cheapest gas, making the 3% on the AmEx a better deal than the 5% on the Penfed VISA.

  • KZ

    Great Bonus are only for Great Spenders. You must earn a good salary and spend good amounts in shopping.

    Most people are poor and they don´t have the need to have credit cards

  • Lockerpunch

    This was a great read from someone who grew up in a family where no one uses credit cards for anything. My family has always taught me to pay for everything in cash and cash only. Don’t get me wrong, it’s been a great way to live, but I liked reading this completely different perspective regarding finances. It’s something I’m definitely going to consider carefully.

  • bbbeatry

    millionmilesecrets.com
    changed my life. i’m 25, a student, and i pay my school expenses with credit cards, resulting in a free trip to japan. currently, i have 4 free roundtrip tickets banked, 1 one way ticket, 3 free nights any category hotel, and many misc points to trade/redeem. i haven’t dabbled in cash back cards bc i prefer to travel, but i’ll look into it now. love the awareness this article has brought! especially where the author underlined paying off the balance in full every month, otherwise it’s all moot :)

  • Dawn Steele

    I love this idea and am going to try it out. However, I am a bit fuzzy when it comes to utility bills, rent, and other reoccuring bills. While it is free to pay these bills using my bank’s BillPay, using a credit card adds fees to the overall bill. Is there a good rule of thumb in regards to added fees? Most cards I have seen don’t offer great points rewards for bills, just a 1:1.

  • Dale Howell

    Can I set her up with my son on a blind date?

  • tdh

    Another under-valued use of using cards is that it gives you an easy way to categorize your spending and plan budgets.
    2 years before my husband and I retired I began downloading our charges (we charge everything we can and pay off every month) from our card account into Quicken. This allowed me to flag each purchase as a particular type of expense. I know how much we spend a month/year on groceries, cloths, eating out, liquor, doctors…everything. From this I had an accurate, itemized view of what our budget needed to be for retirement – no guessing. This should be an crucial step in planning for everyone’s retirement. Retiring isn’t the end folks … with planning it’s the best time of your life!

    • Mary Chouinard

      I totally agree! I didn’t realize it until after I started using my rewards card, before 2005, that I also had the side benefit of easily figuring out how much it cost me to live monthly/annually (I never was great at budgeting, but a cheap spender anyway). During retirement planning, when the question came up about how much I would need to live in retirement, I came up blank. Even without using Quicken, I could determine my expenses from my monthly credit card statements. Now it takes me longer to validate my monthly credit card statement than it does to balance my checkbook! You’re also right about including this in retirement planning and the fact that retirement isn’t the end. It’s the best!

  • http://www.beatstockpromoters.com/ beatstockpromotersdotcom

    Great article

  • Ty Fields

    This is amazing. I’ve found something else to add to my goal list for 2014! Thank you for sharing your knowledge!

  • ksgirl73

    Honestly, I thought the idea of having 12 credit cards read a little bit like an addiction. It’s great that he’s actually making money off the credit cards, but it just seems a little excessive (ie. the spreadsheet). If you have to go to the point of making a spreadsheet to keep track of it all then I have to wonder about it. Besides, I have to wonder just how much is he buying every month that he considers a necessity. Sounds like a lot to be able to use points toward a vacation and then some. Recently I looked into having my utilities switched to my credit card to earn the cash back and it turns out that I’m not getting all that much back. I’ll get a little bit, but I’m not sure I like the idea of regular monthly bills being put on credit.

    • Greg Haney

      You are right, it can seem excessive at first glance. 17 credit cards (I gained some more after this article was posted) is way too many for the average consumer. However, I’m trying to find the best cards for every scenario, and that propels me outside normalcy.

      What I hope to achieve is the answer of using which card for what type of purpose, and sharing my findings. It was because of colleagues and friends that I created that spreadsheet, to give a better analysis and visualization of the options available to consumers.

      If you’d like, I’d be happy to share my spreadsheet. Send me a message at gregoryhaney.com and I’ll reply with attachment.

  • lt519

    Interesting article, I’ve never taken it this far but since I’ve started my career I’ve paid for everything with credit cards. I now have the three major players Chase Freedom, Discover IT and AmEx Blue which give me a pretty wide coverage on all my purchases. But since those have revolving categories I find months where I’m just getting 1% back. I may find one more for restaurants as my lunches at work all qualify as a restaurant.

    The big thing here is to not get wrapped up in having 15 cards if you don’t want to but in realizing that you can average around 3% back on all your purchases you make throughout life if you have discipline and pick maybe 3 cards. That’s a solid investment. For me this can add up to a thousand a year and over a lifetime it’ll be much more.

    Added bonuses like travel, rental car insurance, and purchase protection are other reasons to get cards.

  • Eddie

    Yes there was a disclaimer…but I’m disappointed to see this article and how many people think this is a great idea. The truth of the matter is people spend nearly 30% more with plastic than they would spend with cash. The credit companies know this! They get their fees from all the extra transaction fees paid by the retailers and us as consumers who end up paying a higher price on goods and services to cover the fees.

    Here’s a plan…budget your spending and invest the extra 20-30% less you are spending not using plastic in your Roth, 401k, etc. Just because some random chain smoker lives to be 98 years old, does not mean that smoking is good for your health! The vast majority of people who attempt this are only harming their financial life playing with lenders and credit cards. I don’t know anyone who has become wealthy off managing their brownie points.

    • Greg Haney

      Saw your comment, good point about investing. I maximize my Roth every month before budgeting for required items (Home, transport, health, bills, and 15% savings) and only use any leftover for discretionary spending. That being said, from my 15 cards (always paid off in full) I have never paid any interest, fees, and routinely accumulate bonus rewards every month.

      The method I described above isn’t for everyone, it takes an analytical approach and strong willpower to maintain. But if you change your thinking to consider credit as cash, then you’ll be able to collect on bonuses from spending.