Tag: Debit Card

The No-Cash Envelope System That Works

The post The No-Cash Envelope System That Works appeared first on Penny Pinchin' Mom.

I am a strong believer in the cash envelope system. It works great for our family. But I also know that is not the case for everyone.  You may not want to use cash but love the envelope system concept.  Fortunately, there is a program you can use that marries your desire to use plastic with the discipline of a cash envelope budget.

When it comes to managing your money, spending and trying to get out of debt, there are many programs and apps out there. But, not all of them can do everything.  That means one app for your budget, another for trying to get out of debt and then yet another for managing your spending.

ProActive does it all.  You can manage your money, spending, budgeting, and debt payoff – all from one simple to manage app! But, before you jump in and download it, make sure you read this honest review.  That way, you’ll know what to expect!

What is ProActive?

ProActive combines the beauty of shopping with plastic and the discipline of cash envelopes.  The system ensures that you never overspend – ever!  Just like with cash, when the envelope is empty, you are done shopping!

 

What is the cash envelope budget?

A cash envelope budget is what it sounds like. Rather than using plastic to shop you get cash and place the budgeted amounts into envelopes.  For example, if your budget for food is $200 a paycheck, then you get cash and place $200 in an envelope earmarked for groceries.

When you grocery shop, you use only the cash in the envelope. That is all you have available to spend. It is impossible to overspend.  If there is only $20 left then that means you can’t spend $22.  There is not enough money there.

It is a system that works very well for people who want to better manage and control spending.

 

How does it work?

Once you sign up and create your account, you will get a ProActive branded debit card.  When you are ready to spend, you use the ProActive card.  But, before you can swipe, you have to let the app know which envelope the money needs to come from.  That way, you always stay on budget and don’t spend more than you should.

 

Add funds to your account

When you get paid, review your budget.  Pay the bills that are due.  What you have left over is what you have left to spend on everything else on your budget.  It will include items such as clothing, household items, personal care and beauty, groceries, entertainment, dues, etc.

You will go into the app and click the “+” icon.  That starts the transfer from your bank account to your ProActive debit card.

 

Allocate the money to your virtual envelopes

Once the funds are deposited, you have to assign an amount to each category (a.k.a. envelope).  Review the budget to see what you have available to spend.

 

Shop as usual (but pay with the ProActive card)

You can’t swipe your card until you have told the card which category (or envelope) the money should come from.  Simply open the app and click the spend category.  Then you can swipe.

If there is not enough money left in the category to cover your purchase, it will be declined.  That makes it impossible to overspend.

 

The smart way to use ProActive

As parents, we teach our kids.  They need to know how to take care of themselves, cook, clean and do other things around the house.  But, it seems that financial responsibility is one that gets overlooked.

One thing that ProActive allows is for you to add your kids and teach them how to manage their own money.  You can put funds on their account and they too can set up categories.  And, just like mom and dad, they have to select the category before they spend so they are not spending more than they should either.

ProActive not only teaches your kids how to use a debit card, but also the financial responsibilities that go along with it.  And, it is in an environment that both mom and dad can see (and control).

 

Who is ProActive a fit for?

Just like with every other app or budget system there is never a one-size-fits-all system. That means this may not work for you.  If you love your credit card for the rewards then this will not work for you.  You can’t attach a credit card and use this program.

But, if you struggle to try to manage your money and spending then you really need to get this app. It makes it impossible to overspend and helps you learn how to think about every purchase you make.  You may not need to use it forever as you will become disciplined.

 

What does it cost?

When you sign up, ProActive will give you a 15-day trial.  They want to make sure it is a fit for you before they make you pay.  Then, if you love it, you continue at $5.75 a month (paid annually, so $69).  You can add a second user for $29 a year and even add your kids for just $24 each.

 

What happens if I forget my phone?

It happens.  We leave our phones behind. In that case, it is important that you always have an alternative payment method handy, such as your bank debit card, credit card or cash.

If your goal is to get out of debt, you have to first start with your budget and spending. If you don’t do that, you will never achieve your goals.  ProActive is one tool that helps you every step of the way.

The post The No-Cash Envelope System That Works appeared first on Penny Pinchin' Mom.

Source: pennypinchinmom.com

How to Use Your Cable Bill to Build Credit

Cable companies aren’t in the habit of reporting your payments to the credit bureaus, at least when it comes to your traditional credit reports. But if that’s something you want, there is a way to get those monthly bills to help your credit score.

Simply put, consider paying for cable with your credit card.

Unlike cable providers, credit card issuers do generally report to the major credit reporting agencies, so using your plastic to pay for a bill that you’re already in the habit of covering from month to month can help you build a payment history, the single biggest factor in establishing credit scores.

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Of course, for this strategy to work, you have to pay that credit card off on time and, ideally, in full. Otherwise, it will have the opposite effect on your score and you’ll wind up paying interest just to watch your favorite television shows.

To make sure you don’t miss a payment, sign up for alerts or, even, set your credit card bill to auto-pay. You could also pay the charge off via a linked debit card account as soon as it’s processed if you’re worried about winding up with a big balance (which could affect your credit utilization, another major factor of credit scores) at the end of the month.

A Few More Tips & Tricks

There’s a chance that your provider will charge a fee for paying by credit card, so be sure to check that there’s no extra charge before using this method. And, if you do set that credit card to auto-pay, monitor your monthly cable statements. You don’t want to miss a new fee or billing error and wind up paying more than you owe or intended.

Rewards credit cards can earn you some points, miles or cash back, so if you have one in your wallet, you might want to use that particular piece of plastic to pay your cable bill. If your credit is on the brink and you don’t have any credit cards, you can consider applying for (and then using) a secured credit card, which is designed specifically to help people build credit. (You can learn more about the best secured credit cards in America here.)

A Quick Reminder

Unpaid cable bills can damage your credit, even when they’re not being covered by a credit card. Accounts that go unpaid long enough can wind up in collections, which will hurt your scores. (You can see how any collections accounts may be affecting your credit by viewing your free credit score, updated every 14 days, on Credit.com.)

If your credit is in rough shape, due to an collection account or other payment history troubles, you may be able to improve your scores by paying delinquent accounts, addressing high credit card balances and disputing any errors that may be weighing them down. And remember, you can build good credit in the long term by making all loan payments on time, keeping debt levels low and adding to the mix of accounts you have, as your score and wallet can handle it.

More on Credit Reports & Credit Scores:

  • The Credit.com Credit Reports Learning Center
  • How to Get Your Free Annual Credit Report
  • How Credit Impacts Your Day-to-Day Life

Image: Ivanko_Brnjakovic

The post How to Use Your Cable Bill to Build Credit appeared first on Credit.com.

Source: credit.com

How to Build Credit with Fingerhut

If you’ve been wanting to make a big purchase, but your credit is less than spectacular, you might have looked into Fingerhut as an option. 

Fingerhut is an online catalog and retailer that showcases a multitude of products. On this website, customers can shop for anything from electronics to home décor to auto parts. Fingerhut offers financing through their own line of credit, making it appealing to shoppers with poor credit or a nonexistent credit history. Many consumers have a better chance of getting approved by Fingerhut, than they might have of getting approved through most other credit card companies. It’s an option worth looking into if you want to improve your credit score through credit utilization.  

The major difference between Fingerhut and credit cards that cater to low credit scores is that Fingerhut credit is exclusively available for use with its own company’s products and authorized partners. You’ll also find that the company’s products are pricier than they would be through most other retailers, while also bearing the weight of higher interest rates. While it might seem like a good idea if you don’t have good credit, it’s best to familiarize yourself with the ins and outs of the company beforehand so that you know what you’re signing up for. 

How Fingerhut credit works

When you apply for a Fingerhut credit account, you can get approved by one of two accounts:

  • WebBank/Fingerhut Advantage Credit Account.
  • Fingerhut FreshStart Installment Loan issued by WebBank.

As it happens, by submitting your application, you are applying for both credit accounts. Applicants will be considered for the Fingerhut FreshStart Installment Loan issued by WebBank as a direct result of being denied for the WebBank/Fingerhut Advantage Credit Account. In other words, you won’t have a way of knowing which one you will be approved for prior to applying. Both credit accounts are issued by WebBank and are set up so that customers can purchase merchandise by paying for them on an installment plan with a 29.99% Annual Percentage Rate (APR). These are the only things that the different Fingerhut credit accounts have in common.

The WebBank/Fingerhut Advantage Credit Account

The WebBank/Fingerhut Advantage Credit Account works very much like an unsecured credit card, except that it’s an account that you can only use it to shop on Fingerhut or through its authorized partners. 

This credit account features:

  •  No annual fee.
  • A 29.99% interest rate.
  • A $38 fee on late or returned payments.
  • A possible down payment; it may or may not be required. You won’t know prior to applying. 

If you get denied for this line of credit, your application will automatically be reviewed for the Fingerhut FreshStart Credit Account issued by WebBank, which is both structured and conditioned differently.

Fingerhut FreshStart Installment Loan issued by WebBank

If you get approved for the Fingerhut FreshStart Installment Loan, you must follow these three steps to activate it:

  • Make a one-time purchase of no less than $50.
  • Put a minimum payment of $30 down on your purchase, and your order will be shipped to you upon receipt of your payment. You may not use a credit card to make down payments, but you can use a debit card, check, or a money order. 
  • Make monthly payments on your balance within a span of six to eight months.

You can become eligible to upgrade to the Fingerhut Advantage Credit Account so long as you are able to pay off your balance during that time frame or sooner without having made any late payments. Keep in mind that paying for the entire balance in full at the time you make your down payment will result in you not qualifying for the loan as well as being ineligible for upgrade. 

How a Fingerhut credit account helps raise your credit score

The fact that it can help you improve your credit is one of the biggest advantages of using a Fingerhut credit account. 

When you make your payments to Fingerhut in full and on-time, the company will report that activity to the three major credit bureaus. This means that your good credit utilization won’t go unnoticed nor unrewarded. If you use Fingerhut to improve your credit score, you will eventually be able to apply for a credit card through a traditional credit card company—one where you can make purchases anywhere, not just at Fingerhut. 

Additional benefits of a Fingerhut credit account

Besides using it as a tool to repair your bad credit, there are a few other benefits to using a WebBank Fingerhut Advantage Credit Account such as:

  • No annual fee.
  • Fingerhut has partnerships with a handful of other retailers, which means you can use your Fingerhut credit line to make purchases through a variety of companies. Fingerhut is partnered with companies that specialize in everything from floral arrangements to insurance plans.
  • There are no penalties on the WebBank Fingerhut Advantage Credit Account when you pay off your balance early.

How to build credit with Fingerhut

Fingerhut credit works the same way as the loans from credit card companies work: in the form of a revolving loan. 

A revolving loan is when you are designated a maximum credit limit by your lender, in which you are allowed to spend. Whatever you spend, you are expected to pay back in full and on-time through a series of monthly payments. This act of borrowing money and paying off bills using your Fingerhut account causes your balances to revolve and fluctuate, hence, its name. 

Your credit activity, good or bad, gets reported to the three major credit bureaus and in turn, will have an effect on your credit report. Revolving loans play a large role in your credit score, affecting approximately 30% of your score through your credit utilization ratio. If your credit utilization ratio, the amount of available revolving credit divided by your amount owed, is too high then your credit score will plummet. 

When using a Fingerhut account, the goal is to try to keep your amounts owed as low as you possibly can so that you can maintain a low utilization ratio, and as a result, have a higher credit score.

Alternatives to Fingerhut

If you’ve done all your research and decided that Fingerhut isn’t the right choice for you, there are other options that might serve you better, even if you have bad credit. There are a variety of secured credit cards that you can apply for such as:

  • The OpenSky Secured Visa Credit Card: You will need a $200 security deposit to qualify for this secured credit card, but you can most likely get approved without a credit check or even a bank account. It can also be used to improve your credit, as this card does report to the three major credit bureaus. While this card does come with an annual $35 fee, you can use it to shop anywhere that will accept a Visa. 
  • Discover it Secured:  For all those opposed to paying an annual fee of any sort, this card might just be the one for you. With a $0 annual fee and the ability to earn rewards through purchases, there’s not much to frown about with this secured credit card. One of the best perks, is that it allows you the chance to upgrade to an unsecured card after only eight months. 
  • Deserve Pro Mastercard: This card is a desirable option for those with a short credit history. There is no annual fee and no security deposit required and, if your credit history isn’t very long-winded, that’s okay. The issuers for this card may use their own process to decide whether or not you qualify for credit, by evaluating other factors such as income and employment. This card is especially nifty because you can get cash-back rewards such as 3% back on every dollar that you spend on travel and entertainment, 2% back on every dollar spent at restaurants, and 1% cash back on every dollar spent on anything else. 

Final Thoughts 

Fingerhut is an option worth looking into for those with bad credit or a short credit history. If you want to use a Fingerhunt credit account to improve your credit score, be sure to use it wisely and make all of your payments on time, just as you would with any other credit card.

Even though it might be easy to get approved, the prices and interest rates on items sold through Fingerhut are set higher than they would be at most other retailers, so it’s important to consider this before applying. 

There are a ton of options available, regardless of what your credit report looks like, if you are trying to improve your credit. If the prices of Fingerhut’s merchandise are enough to scare you away, you might want to consider applying for a secured credit card. 

How to Build Credit with Fingerhut is a post from Pocket Your Dollars.

Source: pocketyourdollars.com

Prepare for Holiday Shopping with These Timely Credit Tips

According to a YouGov Parent Survey in 2019, a quarter of parents entered the 2019 holiday shopping seasonstill paying down debt related to 2018 holiday spending. Deloitte numbers put holidayretail salesgrowth in 2019 at 4.1% year-over-year. In 2020, Deloitte predicts growth of between 1% and 1.5% year-over-year for the holiday season.

It might be that some people no longer want to pay for holiday gifts, decorations and food a year down the road. But it’s also true that the COVID-19 pandemic has hit consumerwallets and some people might be cutting back this year.

That doesn’t mean that people aren’t shopping. Google and other thought leaders note that changes to shopping habits and the need for social distancing and other measures will likely spread the holiday shopping season out longer. Shoppers are also likely to turn to online shopping.

With a ton of shopping opportunities, a longer holiday shopping season and pent-up pandemic energy, it might be easy to overspend and create debt you’ll deal with into the future. Follow these tips to prepare for holiday shopping so you can protect your financial standing, save money and make the most of the resources you have this season.

1. Check your credit scores

Begin by checking your credit scores and reports. They tell you where you stand if you want to apply for credit. They also give you a baseline of where you are so you know if your score goes up or down later with no explanation.

An unexplained drop in your credit score can be a sign your financial information is compromised. Unfortunately, the holidays are prime time for many scammers. Using a service, such as ExtraCredit’s Track It feature to keep tabs on 28 of your FICO scores, helps you know when you need to act to protect your credit.

2. Ask for a credit limit increase

If you have existing credit cards and you’re a cardholder in good standing, the months prior to the holidays can be a good time to ask for a credit limit increase. You’re not asking so you can spend more-it’s typically advisable to keep spending in line with your budget no matter how much credit you have.

You’re asking for a higher limit so you can spend what you already planned to without hurting your credit utilization. Credit utilization is the second-most important factor in determining your credit score-second only to payment history. It’s the ratio between your credit limit and how much of that credit you have used.

If you have a card with a limit of $1,000 and you spend $300, that’s a utilization rate of 30%. But if you get approved for a credit limit of $2,000 and you spend $300, that’s a utilization rate of only 15%, which is better for your score.

3. Apply for a credit cardwith a 0% APR introductory offer

Those with good or excellent credit might want to consider applying for a card with a 0% APR introductory offer. If you qualify for such a card, you typically have one or two years to pay off purchases made during the introductory period without accruing any interest.

This can be a way to finance your entire holiday without paying anything more for the privilege of doing so. However, it’s still important to maintain your budget and not overspend just because you won’t be paying the balance off until later. Otherwise, you make this season’s holiday festivities next season’s problem.

4. Pay down debt before-and after-the holidays

Speaking of last season’s debt: If you can pay it down before you start spending this season, that’s a great accomplishment. It also frees up your credit and your budget so you can better enjoy the current holiday season. If you’re paying $100 a month on your debt, that’s $100 a month that might go toward gifts or celebrations that you don’t have to put on a card this year.

If you do use credit to pay for the 2020 holidays, have a plan for paying it down as soon as possible. That’s especially true with 0% interest cards. The longer you wait, the greater the chance you’ll miss the introductory period and potentially be on the hook for a lot of interest expense.

5. Create a holiday spending budget

Whether you’re using cash or credit-or a mix of both-enter the 2020 holiday shopping season with a plan. Take an honest look at your personal budget. If you don’t have a budget, create one before you move forward. Then decide how much you can realistically spend during the holidays.

Consider which gifts you want to buy and which events you want to host or attend. You might not be able to do everything, and that’s OK. Be honest with yourself, your family and your friends about what you can afford to do with your time and money this year.

Then make a list and assign each item a monetary budget. That can include:

  • Gifts as a total
  • Gift extras, such as wrapping and tags
  • Shipping, both for receiving items you buy and for shipping gifts to others
  • Food and drinks
  • Travel
  • Decor
  • General festivities, such as tickets to holiday events

Once you assign a dollar amount to a category, stick to it. That’s a good idea even if you’re spending with credit.

6. Align budgeted spendingwith credit cardrewards

Once you know how much you want to spend, decide how best to spend it. If you’re using credit cards for the holidays, check your accounts to see if any offer cash back or rewards points. If they do, double-check which categories or stores you can shop in to earn the most points with each card.

For example, some travel rewards cards offer 6x points when you shop at supermarkets. You could use such a card to cover the food-and-drink portion of your holiday budget and reap the biggest rewards possible from that spending. You might also be able to maximize rewards when purchasing gift cards.

7. Guard your financial information and identity

As you enjoy holiday shopping, be on guard. Don’t use debit card PIN numbers unless you have to, and shield the keypad when you enter your information. Keep a close eye on your wallet or purse, and check your credit card statements regularly to ensure all charges are yours. You can also use ExtraCredit’s Guard It feature to help keep your identity and account information safe during and beyond the season.

Sign up for ExtraCredit today!

The post Prepare for Holiday Shopping with These Timely Credit Tips appeared first on Credit.com.

Source: credit.com

Perch unveils impressive credit building app

Perch is a new mobile app available for iOS that can improve your credit score by incorporating your rent history and recurring subscriptions such as streaming services.

Currently, Perch is only available through the Apple Store. There are some similar offerings out there, but I think this one is better. It’s completely free and it reports to more credit bureaus.

Read more from our credit card experts.

Ask Ted a question.

Rent

Typically, your rental payment history does not appear on your credit reports. That’s a shame, because rent is the largest monthly expense for many households. It would be great if paying your rent on time helped you build your credit score.

There are some existing services that facilitate reporting your rent to the credit bureaus, but they typically charge fees. They can also get complicated, since many require your landlord to respond to the tracking company each month or mandate that they receive your payments through their platform). With Perch, you provide your lease details and grant read-only access to your bank account via Plaid’s secure API. That allows Perch to verify your payment history – without bugging your landlord or forcing you to change your payment method.

Even better, Perch can retroactively add up to 24 months of rental payment history to your credit reports with all three major bureaus. This could jumpstart your credit score in a big way. The company tells me their average customer improves their credit score between 60 and 160 points. And many who were previously unscorable instantly land between 670 and 690 – placing them in the “good credit” category. That’s incredible!

See related: How to pay rent with a credit card

Subscriptions 

Perch also has a novel approach to monitoring subscriptions. Users notify the company which recurring subscriptions they want to include, and Perch provides them with a virtual debit card loaded up to that pre-approved amount. The user pays Netflix, Hulu, Spotify, Apple Music or another subscription service with that virtual card number. They then pay Perch back. Perch reports this virtual card payment activity as an additional tradeline on users’ credit reports (note that Perch currently reports subscriptions to Equifax and TransUnion; it plans to add Experian by July).

See related: I signed up for Experian Boost. This is what happened

I asked Perch founder and CEO Michael Broughton what happens if someone doesn’t pay them back – would that end up hurting their credit score? He said no. Perch really wants to help their users build credit, so it will not place a negative mark on a customer’s credit report in that situation – or even charge a late fee.

Instead, Perch relies on proactive measures such as cash flow underwriting and warnings if your account balance falls too low. If you don’t pay, they’ll eventually prevent you from making future purchases. Broughton explained that their liability is very limited because they pre-approve these virtual card purchases and the eligible subscription services tend to charge modest amounts. He assured me that no one can get away with buying $500 Nikes and skipping town.

About Perch

Broughton is a 21-year-old graduate of the University of Southern California. He was inspired to found Perch after he had difficulty securing a loan for a $10,000 tuition shortfall. One of seven children born into a military family, Broughton was the first member of his family to attend college. He’s now assisting others who wish to improve their financial lives. The company’s investors include heavy hitters such as Citi, Sequoia Capital, SoftBank and Y Combinator.

The market is huge. FICO reports that 79 million Americans have subprime credit and another 53 million can’t be scored because they lack a sufficient credit history. Broughton told me Perch’s initial sweet spot is 18-25 year-olds, but he also noted that many older adults could benefit, particularly immigrants and people rebuilding their credit after a misstep. He has big plans for expansion and believes Perch can benefit 100,000 people in 2021. The app formally launched in late January and is onboarding new customers in weekly batches.

See related: How to build credit

Broughton’s ultimate goal is to spread the gospel of financial literacy and credit building. He wants to help people obtain their first credit cards and other financial products. “We want to launch you into the credit world on a better foot,” he said. The way I see it, Perch is off to an excellent start.

Have a question about credit cards? E-mail me at ted.rossman@creditcards.com and I’d be happy to help.

Source: creditcards.com

How to Maximize Rewards on Everyday Spending

Woman using credit card on everyday spending

While many rewards enthusiasts focus on signing up for new credit cards to earn signup bonuses, not everyone has the time or desire to play the signup game. There is effort involved in tracking multiple cards, annual fees, and rewards programs, after all, and some people don’t want to spend their time or mental energy this way.

If you’re someone who falls into this category, you may be better off maximizing one or two cards instead of chasing rewards. Fortunately, you can earn plenty of rewards over time if you’re savvy about your card’s benefits and bonus categories.

The key to getting the most out of your rewards cards is understanding how they work and looking for opportunities to earn more points on your everyday spending. Here are some tips that can help.

Brainstorm every bill you could pay with a credit card

Because rewards cards offer points based on each dollar you spend, maximizing the amount you can spend on credit is the best way to boost your rewards haul. The smartest strategy to use here is figuring out how many of your monthly bills you can pay with a credit card.

While you may not be notified or aware, it’s possible that bills you’ve been paying with a check or debit card for years can be paid with a credit card without any fees. While your bills may vary, some expenses you should try to pay with a credit card include:

  • Rent
  • Utility bills like electric or gas
  • Health insurance
  • Cable television and internet
  • Cell phone
  • Taxes
  • Daycare
  • Auto and home insurance
  • Subscription services
  • College tuition or student loans
  • Medical bills
  • Lawn care

Keep in mind that these are just some of the bills you could be paying with credit. Depending on your situation, you could have additional, uncommon expenses to cover that could be paid with credit with ease.

Also, remember that these additional bills should be paid with credit on top of your everyday expenses like groceries, dining out, gas or bus fare, and miscellaneous spending. Every time you buy something in person or online, you should strive to pay with your rewards card if you can.

Leverage your rewards card bonus categories

It’s also important to leverage your favorite card bonus categories, whatever they may be. This is especially important if you have a few cards with different bonus categories since you’ll want to make sure you’re using the right card for bills that let you earn bonus points.

Let’s say you have a travel credit card that earns 3x points on dining and travel and another card that earns 6x points at the grocery store. In that case, you would be smart to use the travel card for dining and travel purchases and your other card when you stock up on food. While the amount of rewards you earn with individual purchases may seem nominal, using the right card for the right purchase can help you earn a lot more rewards over time.

Set up auto-pay bills to be paid with credit

Most of us have bills set up to be paid automatically, whether it’s our Netflix and Hulu subscriptions, gym membership, or utility bills. Make sure each bill you have set up to be paid automatically is set up to be paid with your rewards card and not a debit card. This way, you can earn rewards points on those expenses every month.

Use shopping portals and dining clubs

Many flexible rewards programs, frequent flyer programs, and hotel loyalty programs have shopping portals you can access to earn extra points. Major airlines like American, Delta, and United also have shopping portals that work similarly. (See also: How to Maximize Rewards Through Credit Card Shopping Portals)

Some programs like Southwest and Delta also offer dining clubs. These programs let you earn additional points or miles just for dining at participating restaurants in your area. It’s easy and it’s free to join, so you may as well earn extra miles on your spending if you’re going to dine out anyway. (See also: Everything You Need to Know About Airline Dining Rewards Programs)

How much the average family can earn

If you are skeptical the average family can rack up meaningful rewards without signing up for new cards over and over again, look at how this might work in real life. For example, imagine a family of four with two rewards card-toting adults. Across the two of them, they have:

  • A cash back card that earns 2% back
     
  • A travel credit card that earns 3% on dining and travel
     
  • A rewards card that earns 6% cash back at the grocery store on up to $6,000 in spending each year

To figure out how much this family might earn, we used Bureau of Labor Statistics spending averages from 2017. Here’s a rundown of that data for the year plus how much a family could earn in rewards over 12 months based on average expenses:

  • Food at home ($4,363): $261.78 in rewards at 6%
     
  • Food away from home ($3,365): $100.95 at 3%
     
  • Utilities, fuels, and public services ($3,836): $76.72 at 2%
     
  • Household operations ($1,412): $28.24 at 2%
     
  • Household supplies ($755): $45.30 at 6%
     
  • Household furnishings and equipment ($1,987): $39.74 at 2%
     
  • Apparel and services ($1,833): $36.66 at 2%
     
  • Gasoline and motor oil ($1,968): $39.36 at 2%
     
  • Other vehicle expenses ($2,842): $56.84 at 2%
     
  • Healthcare ($4,928): $98.56 at 2%
     
  • Entertainment ($3,203): $64.06 at 2%
     
  • Personal care products ($762): $45.72 at 6%
     
  • Education ($1,491): $29.82 at 2%

Total rewards: $923.75

While $900+ is a lot to earn in rewards within a year, you have the potential to earn a lot more. After all, these are just some of the expenses the average family faces and not all of them. If you could pay some additional big bills with credit each month like daycare or your rent, you could significantly add to your bottom line.

What to watch out for

While maximizing rewards cards is a smart idea if you’re using them already anyway, there are always pitfalls to be aware of when you’re using a credit card. Here’s what to watch out for during your quest for more cash back and travel rewards.

Fees for using credit

While there are many bills you can pay with credit without a fee, some vendors, merchants, and service providers charge a fee to use a credit card as payment. Fees are especially prevalent on bills such as utilities, cable or internet, rent, and insurance. Make sure to verify you aren’t being charged a fee to use credit before you proceed.

Annual fees

Don’t forget that some rewards cards charge annual fees. These fees may be worth it depending on your spending and rewards haul, but you should always factor them into the equation to make sure each fee is worth paying. If you’re against paying annual fees, look for rewards cards that don’t charge one.

Budgeting mishaps

Using a credit card for all your expenses may simplify your financial life, but it could also cause your budget to fall out of whack. Make sure you’re only spending on purchases you planned to make anyway, and that you’re tracking your spending and paying off your credit cards regularly.

Debt

Never use credit cards for purchases you can’t afford to repay if you’re pursuing rewards. The interest you’ll pay will always be much more than the rewards you earn. If you’re worried using credit will cause you to rack up debt you can’t afford to repay, you’re better off sticking to cash or debit instead.

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