What Are The Worst Ways To Redeem Your Credit Card Rewards?

September 05, 2012

There’s certainly no shortage of websites that gloat about credit card rewards (admittedly, mine is one of them) so it’s safe to assume that you’ve already heard plenty about the advantages of cash back, airline miles, and the like. But what about the disadvantages? Even the best reward programs have hidden pitfalls. Depending on how you redeem them, you may be taken for a ride. Here are the worst choices you can make. Continue reading “What Are The Worst Ways To Redeem Your Credit Card Rewards?”

When It Comes To Your Money, Be Assertive.

August 22, 2012

I was proud of my wife the other day for the way she handled an issue that arose with the children’s school bus.  You see, our high schooler, Rachel, and our middle schooler, David, ride the bus to school together.  They have to walk several blocks down the street to get to their stop. Granted, it’s not the two mile walk I had to make when I was their age, but my wife took issue with them walking so far when there is a stop right on our corner for the elementary school children, who are picked up earlier in the morning.  Rachel and David walk right past it on the way to their stop. There are four other middle school children who ride with them and do the same thing.  There used to be children who lived further down the street and got the bus at the corner further down the road, but those children have grown up and moved away so it is just the six kids from our street who are picked up there now. Well, after watching this for a week and a half and griping about how ridiculous it was for them to walk so far, Susan decided to call the school and ask if they could get the stop changed to our corner. Continue reading “When It Comes To Your Money, Be Assertive.”

Cosigning For a Credit Card Doesn’t Equal Love

August 01, 2012

The process of building (or rebuilding) credit can seem like a catch-22. In order to be approved for a prime credit card, you first need to have an established and respected credit history. But how do you attain that history, if they won’t approve you in the first place?! Is co-signing your only choice? Continue reading “Cosigning For a Credit Card Doesn’t Equal Love”

Why I Don’t (Always) Hate Debt

July 26, 2012

In his blog post last week titled “Why I Hate Credit Scores,” my colleague Michael Smith wrote about his aversion to debt and why he wants to get to a point where he doesn’t care about his credit score. I generally agree. Debt can really get people (as well as businesses and governments) into a lot of trouble. We see that all the time in the people we help. That being said, I don’t think all debt is bad debt. Instead, I would argue that there are circumstances where debt can be a good thing. Continue reading “Why I Don’t (Always) Hate Debt”

Which Credit Cards Give You the Most Bang For Your Buck?

May 24, 2012

After a recent workshop, someone asked me if I use credit cards. She seemed genuinely surprised when I said yes.  Credit cards are like fire. If you misuse them, you can get really burned. But if you use them responsibly by paying off the balance in full and on time (you can have the balance automatically deducted from your checking account so it acts like a debit card), you can earn lots of benefits. These come in the form of everything from straight cash to airline miles to some very strange and unique perks like adult band camp and weightless flight.

Personally, my favorite is cash because of the flexibility it offers. Other rewards too often tempt you to get something you don’t really need instead of saving money. The trick to maximizing your cash back is to pick the right card for each kind of purchase. While there are lots of sites that rank the “top” rewards cards, I’ve found that they usually don’t have the cards with the best offers since they’re generally limited to those that pay or share revenues to be on the site. (In that sense, they’re kind of like commissioned stockbrokers.) Here are the best credit cards I’ve found to earn cash back on each kind of purchase:

Gas and Groceries

These are two expenses that we’ve seen rising in price lately. You can at least get some of that money back with the Pentagon Federal Credit Union Visa Platinum rewards card. The card gives 5% cash back on gas purchases, 3% on groceries, and 1% on everything else. Even if you’re not a Pentagon employee, you can become a member of the credit union by signing up with one of a number of affiliated civilian organizations.

Food and Entertainment

The Citi Forward® Visa card provides 5% back (in the form of cash or reward points) on purchases from restaurants (including fast food), bookstores, music stores, video rental stores, and movie theaters. You also get additional points every billing period that you pay on time and stay within your credit limit.

Rotating categories

The Chase Freedom Visa pays 5% cash back on categories of purchases that rotate every 3 months and 1% on everything else. That means you have to keep track of the changing categories to get the most from it. For example, right now the bonus categories are grocery stores and movie theaters until the end of June.

General Purchases

For everything else, there’s the Fidelity Investment Rewards American Express card, which deposits cash equal to 2% of your purchases into a Fidelity brokerage account with no limits or annual fees. You can also get cards that deposit into a Fidelity 529 or retirement account if you prefer. (In any case, having it deposited into any of those investment accounts has the additional advantage of discouraging you from wasting it.) This is the highest general cash back offer I’ve seen so it’s probably the best card for making purchases that aren’t covered by one of the above categories.

Cash back isn’t the only reward you can get with credit cards. Here are a few others that can have a high cash value for certain types of users:

Future GM car buyers

If your next car will be from GM, you may want to consider the GM Mastercard, which offers a 5% rebate on purchases towards a new GM car. Of course, you have to actually want to buy a GM car to make this card worth it. Otherwise, it doesn’t make much sense.

Frequent hotel guests

The Starwood Preferred Guest American Express card won last year’s SmarterTravel® award for “Best Traveler Rewards Card” and is often cited by travel aficionados for a rewards program that can be worth more than 5% if redeemed for hotel rooms.

Future college students and their friends and family members

The Upromise World Mastercard can pay up to 3% on eligible online purchases and 11% on eligible grocery purchases. The catch is that you need a Upromise account since that that is where the money is deposited and you must shop from their list of eligible merchants to earn rewards. You can also have the money go to the Upromise account of a friend or family member.

I’m sure this list isn’t exhaustive. Do you know any other credit cards with rewards over 2% in cash value? (If it’s less than 2%, you might as well go with one of the Fidelity cards I started with.) If so, let us know about them in the comment section below.

What an Accident Taught Me About Car Rental Insurance

April 19, 2012
Updated June 14, 2017

If you’ve ever had to rent a car, you know that car rental companies love to sell insurance on their cars. They’ll often ask whether you’d like just the basic coverage or additional coverage at the counter even after you’ve already declined both when making your reservation. After all, it’s one of their big profit centers. Continue reading “What an Accident Taught Me About Car Rental Insurance”

Is Your Debit Card Putting You at Risk? What to Watch Out For

April 05, 2012

I recently read this Forbes article called “Why You Should Never Use Debit Cards.” One of my rules of thumb is that you should never say never (including now so it’s actually that you should rarely say never). However, the article makes a good point. The idea is that fraud protections are much weaker for debit cards than credit cards. That’s because if you dispute a charge on a credit card, you don’t have to pay it until the investigation is over. If the bank determines that the charge was indeed fraudulent, you may not need to pay anything at all. Continue reading “Is Your Debit Card Putting You at Risk? What to Watch Out For”

5 Financial Rules You May Need to Break

March 15, 2012

There are certain guidelines that we financial planners tell people to help keep them out of trouble. Most of the time, they’re right on. But there’s almost always an exception to the general rule. Here are some of those rules, why they usually make sense, and when they might not. Continue reading “5 Financial Rules You May Need to Break”

How I Recovered From More Than $30,000 in Credit Card Debt

February 23, 2012

When I was 18, I got my first credit card. What should have been an occasion to mark the beginning of wise financial habits instead began a three-year period of reckless spending and horrible choices. By the age of 21, I found myself in debt to the tune of $30,000 – in addition to nearly $10,000 of personal debt to my parents, who financed my college education. Unfortunately, like many other Americans, I wasn’t able to use credit cards and rewards wisely. Continue reading “How I Recovered From More Than $30,000 in Credit Card Debt”

Using Your 401(k) in Retirement

February 09, 2012

We recently received this  question on the Ask a Question to a Financial Planner section of our blog:

“I have $35k in bank card debt+$30k in retail credit debt. Bank interest range 13/23%, retail 18/29%. I’m 63, and have $40k in a 401acct where I work. I want to retire this year with two company pensions ($1750/month) and early SS($2400/month, both wife and me). I need to get rid of some monthly payments of debt, where should I use my 401 money toward this goal. All my debt is unsecured, my home is paid off, health is good. I’m ready to go fishing.” Continue reading “Using Your 401(k) in Retirement”

GUEST BLOG POST: 4 Lessons from the Debt Ceiling Debate

July 20, 2011

Let’s get to the root of the problem. Our national problem with debt belongs to us all.  It is a startling fact that the aggregate amount owed by U.S. consumers to their creditors is approximately equal to, if not slightly greater than, our government-held debt, according to various official estimates.  So, while Congress and the Administration works to clean up our national act, we could all do some housekeeping of our own. Continue reading “GUEST BLOG POST: 4 Lessons from the Debt Ceiling Debate”