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Friday, March 09, 2007

Alav HaShalom: Ode to a Credit Card

(Note: See other posts below. I'm actually catching up on this Blogging Thing).

What a sad day today is. We just received notice from one of our credit cards (Card 1) that they are decreasing our cash back rewards significantly as of mid-April. For the past year and a half we have been earning 5% cash back on all purchases in supermarkets, drugstores, and gas stations. Being that we have another credit card (Card 2), which is now unavailable to everyone except current card holders, that offers 2% rewards which are put directly into a 529 College Savings Account, we have carefully used each card to its greatest potential and only used Card 1 only when it offered 5% cashback and used Card 2 for everything else. Never have we paid an annual fee or a penny of interest.

But as it has been said, all good things must come to an end and that day is coming soon with Card 1. No longer will money grow on trees, or in grocery stores, supermarkets, and gas stations as the case might be.

G-d willing Card 2 will not decide to send us packing since they offer a very generous rewards program that is probably the ticket to Beit Midrash/Seminary and University for our children, as I don't see how we can fully fund Day School/Yeshiva tuition and a College Savings Account simultaneously.

The upside: I won't have to remind my husband which card to use when he purchases something. We will only be using one card as of mid-April. Since we are meeting our bills, unless there is a large discrepancy in "pay" my motto is money for later is better than money for today, so long as you don't desperately need the money for today.

13 comments:

Somewhat Anonymous said...

Card 1 wasn't an Amex Blue Cash was it? If not, get one, they offer 5% on groceries and such and 1.5% on everything else (after crossing a $6500 annual spending floor). I use it for everything.

Nuqotw said...

Actually, getting the Blue Cash card might be just a temporary fix. The reason that companies offer premium rewards, say 5%, on grocery/drug/gas purchases is because they want to you to use your card for small, everyday stuff, not just bigger purchases. After a time, the rewards get phased out. They just cannot make money in the long term if they give 5% back on small purchases. Sorry.

Anonymous said...

nuqtow - may as well enjoy it while it lasts though, no?

nuqotw said...

Yes and no. Opening a new credit card has at least a temporary negative effect on one's credit score, so the rewards must be weighed against benefits.

Anonymous said...

I don't know a tremendous amount about credit score models but if you always pay your bills on time and don't carry a balance on Credit Cards, it should be high enough that a small dip won't matter anyhow

themarykaygal said...

a TON of places don't take amex. So many that I never bothered getting one-- it's too frustrating when places won't take your cc and that's all you brought with you that day (no checks or cash or other cc's). Kosher restaurants that don't take cc's at all just kill me.

Ari Kinsberg said...

we've been using a citibank card, but i am upset with them because their points expire. so i switched to amex. i've only had a few places tell me they don't accept it; unfortunately one of these places is my college, which accounts for my single largest annual expense.

Anonymous said...

there was a WSJ article published a year ago (roughly) that stated that one should never close a credit card because it has a negative impact on your credit score. rather, you should continue to use it (at least a few times every few months) just to keep that line of credit open.

thanks for the advice last night!
-mb

nuqotw said...

The negative impact of closing a card is temporary. It can make sense to close a card you don't need, namely if you need to qualify for a large loan, like a mortgage, in the near future. If you do, close the card(s) that you don't use, since the amount that you could potentially borrow on the card is a liability for the mortgage lender.

Also, you don't need to use the card a few times every few months to keep the line open. Just use it a few times a few months before the expiration date.

Ari -- it sounds like you live in the NYC metro area, or else out of the USA. Many places don't take Amex outside of those areas.

Ariella said...

Our primary card earns free gas. We do have other cards but almost never use them except for store credit cards that offer additional discounts (like Kohl's) or free shipping (like LL Bean)for the charges.

RaggedyMom said...

Happy credit card reward story:

We have a points card where the only reward I'm interested in is a check. No gift cards, please.

I called a rep because we had over 9,000 points, and I didn't quite remember what the rewards were. She said that for every 3,000 points, we were eligible for $20. She neglected to mention that if we waited until we accumulated 10,000 points, the reward was bumped up significantly.

When I told RaggedyDad that I ordered the reward checks, he said, "Why didn't you wait for the 10,000?"

I then called the company back and explained what happened. I said that my call to ______ (thank G-d for taking the names down!) was a good faith request for information about the rewards program, and that if it had been explained more thoroughly, it is obvious that I would not have chosen the reward now while being so close to the next level. I told them I understood that they are running a business, but that the lack of information was deceptive.

The rep agreed with me, and the following month, we got the reward worth waiting for. :)

Anonymous said...

"it sounds like you live in the NYC metro area"

why live anywhere else?

-ari kinsberg
agmk.blogspot.com

Mel said...

Discover Card has a great rewards program. Aside from 5% cash back on a whole bunch of stuff, they offer double and triple rewards for gift certificates, and they have them for many companies. I rent cars with them, and things like that. They also offer an investment option which keeps that money working for you.