I am a big fan of Dave Ramsey, the financial guru who helps people get out of debt. However, I don't agree with 100% of his philosophies--and the biggest difference is my opinion on using credit cards. I think that if you can stay within your budget and pay off your credit cards every month, credit cards are great tools to get extra awards and freebies!
We charge everything we can to our credit cards (anything that doesn't have an extra fee for using a credit card) and pay off our cards monthly so we don't pay any interest or finance charges. We charge groceries, utilities, travel, our kids' activity fees, etc. Over the past several years, we used a credit card that gave us 1% cash back for most purchases (2% or 5% on certain categories). And that was ok, as we would cash in our bonus every year or so and have some extra money.
We are bombarded with credit card applications in the mail daily. We normally don't apply for new credit cards, but last year, we decided to apply for new Disney Visas. Just for opening the cards, we got $400 ($200 each), which we used to pay for a few nights at a Disney resort prior to our cruise last year. We have had the cards over a year now and have accumulated more "Disney dollars" to spend on a future vacation.
But this year, I was inspired to see what other credit card rewards and incentives are out there. I was also inspired by my sister-in-law, who was able to use credit card airline miles to pay for a trip to Europe for her family of 4. She recommended that I check out a few blogs for inspiration and instructions.
The blog I've read most frequently is Million Mile Secrets. Based on the info in that blog, we decided to switch up our credit cards again earlier this year. My husband applied for a Marriott Rewards Visa, and I applied for the Southwest Airlines Rapid Rewards Visa (two cards, a business card for my freelance jobs and a personal card).
Our changes have paid off--we received 4 free nights at Marriott just for opening the card, which we will use for our anniversary this year and a vacation next year.
But the biggest payoff is I now have 110,000 Southwest Rapid Reward miles and a Southwest Airlines Companion Pass! This companion pass is like a golden ticket for us, because it means that whenever I fly Southwest (either a paid flight or using miles), my husband gets to fly with me for FREE! This pass is good through the end of 2014.
To get the companion pass, you either have to take 100 Southwest flights in a year, or earn 110,000 miles in one calendar year. Each credit card I opened offered 50,000 miles for spending $2000 within the first 3 months. We used the cards as our primary credit cards throughout the year on our regular expenses until we reached 110,000 miles.
Southwest Rapid Reward points are valuable because Southwest has no blackout dates. That's right, NO BLACKOUT DATES! The points for flying are also based on the fare, not a standard amount of points for each flight. Based on current prices, and the fact that my husband flies for free, it's looking like we can make our Rapid Reward points cover two family vacations next year and one special 10th anniversary trip just for my husband and me. For a family of 5 like us, this is a HUGE savings on airfare! I'm estimating that we are saving about $2500 in airfare by having these points.
I know some people make credit card rewards a full-time hobby (or part-time job). We are not that extreme (yet). But I do see value in changing up our cards every year or so to take advantage of new sign-on freebies. (We have checked our credit scores, and they've only gone up since we switched cards).
Do you use credit cards for rewards or incentives? What is your best reward?