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.
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.
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Get started with a free financial assessment.
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.
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.
How I Charged My Way to Costa Rica
Now I am 24 years old. I graduated college, work full-time as a financial analyst, and have 13 different credit cards (12 for personal use and one for business). Last year, I was able to buy an eight-day adventure vacation in Costa Rica—with just my credit card rewards alone.
At every possible point, I pay with a credit card to earn rewards. I still carry no balance, have never missed a payment thanks to auto-payment, and routinely accumulate 5% or more back on every purchase through cash or points. And while carrying multiple cards can be bad for your credit score, mine is 796 and climbing.
Outside of work, I enjoy trail running, hitting the gym, movies, cooking, reading books, playing piano and discovering new gadgets. But as a Type A personality, I also now consider it a hobby to maximize potential credit card rewards.
We spend money every day. Why not benefit from it? I’ve learned that credit cards are not evil. In fact, when used correctly, they give the user free money.
Getting to this point wasn't easy. Through careful monitoring of all major banks and credit card companies, I’ve hunted down the best possible card for each type of purchase in order to maximize my "free money" return ratio.
"As a Type A personality, I now consider it a hobby to maximize potential credit card rewards."
What I Look for in a Card
For home insurance payments, I use my Chase Sapphire card, and for my utility bills, I use BankAmericard Cash Rewards—neither has an annual fee. For groceries, I use my American Express Blue Cash Preferred. Although it carries a $75 annual fee, it offers unrivaled rewards of 6% cash back on groceries, so the perks I gain far outweigh the annual cost, thus justifying its place in my wallet.
I’ve sought to strategically fill gaps in my rewards coverage. My end goal is total maximization of potential rewards on every purchase. But not every card is going to provide that coverage universally, so, I reasoned, why not have multiple cards?
When I look for a new card, I'm looking for long-term benefits. So while I pay attention to sign-up and bonus offers, the real value to me is in the card's regular rewards. It all comes down to math. For example, last year I used the American Express TrueEarnings card for gasoline purchases, yielding 3% rewards. I began to think that there was probably an option to exceed 3% in rewards, and began to do a little Googling.
One card I found carried a $135 annual fee, which would negate my long-term rewards savings. Another card offered 6% back on fuel, but only for the first six months. The last card I found was offered by Pentagon Federal. And while its rewards for other types of purchases were not exciting, the card offered 5% back on every fuel purchase, no time limit, no annual fee. Sold!
13 Cards Later: Keeping Track of the Details
To keep track of all my cards, I have an Excel spreadsheet that helps me memorize which card to use for what type of purchase. But when I’m making a purchase in-store and don’t have access to my spreadsheet, I use the mobile app Walla.by. It allows me to store all my credit cards and uses my smartphone's GPS location to determine which store I'm in and tell me which of my credit cards will yield the largest reward.
For web purchases, I use LastPass, which stores a password-protected virtual copy of my credit cards, allowing me to pick the best reward payment with just a click, and without actually having the card on hand.
I take full advantage of the free credit report from all three bureaus annually, and monitor my credit score weekly through Credit Karma, a free service that provides credit report and score monitoring from TransUnion. It's important to note that a large number of open credit accounts will severely affect your credit score. But all of my accounts are in good standing, with no late payments, and are always paid in full. So, in my case, having so many cards has actually boosted my score.
The negative perception of credit cards is completely wrong. So many money experts tell people not to pay with credit cards, which is crazy and the opposite of what smart consumers should be doing. The real problem isn't with credit cards; it's the consumers who choose to carry a balance. Paying off a balance in full each month will result in no fees or interest, plus accumulated rewards. My strategy is helping me earn another free adrenaline-filled trip ... this time to New Zealand!
I have three simple steps for using credit cards. Step one: Use credit cards for every purchase possible. Step two: Always pay off balances in full each month. Step three: Profit!