Thursday, December 4, 2008

2% Cash Back Credit Card Offer

I love credit cards. They're great; rather than paying with cash, I pay for every purchase with credit. I make 2% cash back with my current credit card. Of course I have the cash before buying the product (or else I wouldn't have bought it in the first place), but credit cards allow me to defer payment until my statement comes around. Since we put our money in high interest savings accounts (currently at 4%), we're making interest on this money in the 6 weeks it takes for us to be billed. So the real benefit to us of using credit cards is 2% of every purchase + the interest accrued during the 6 week billing cycle. This amounts to several hundred dollars a year.

If you exercise self restraint with credit (i.e. spend with them as you would with cash), I recommend buying everything imaginable with credit. You're also helping your credit score at the same time. Along those lines, I will open up a credit account for each of my children when they turn 16 or so. Length of credit history is a HUGE portion of your credit score, so setting up a credit card for a 16 year old will significantly help your son/daughter when it comes time for them to get a mortgage/student loan. Parents who teach children that credit is evil are setting their children up for failure when they go to apply for a mortgage or student loan. Responsible use of credit is a valuable skill.

If you want a 2% cash back credit card, they're hard to come by. Mine is no longer offered. Here's a new one that I found out about today:

Have fun exploiting credit card companies (at the expense of stupid consumers who pay interest)! Can you imagine a world where nobody paid credit companies interest? Credit card companies would all fail.

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