Do you still use a debit card? That could be a big mistake. Well maybe not catastrophic, but it could be saving you some easy money every month.
Last week I was telling my family about how I froze my credit due to the Equifax breach that occurred a few months ago. With the identity theft issues they have had in the past, they are going to follow my recommendation and freeze their as well. They questioned weather or not it would affect current use of my credit cards (it won’t), and I found out they still use debit cards. I was shocked. With all of the commercials and adds on every channel, you would think they would have been sold on converting to a credit card for the cashback rewards. But nope. They didn’t want to deal with the hassle of changing direct deposits and connections with their bank accounts. It may be a hassle to re-arrange your accounts (about 10 minutes worth of hassle), that can leaded to free cash without any ongoing effort. Their debit cards aren’t getting them anything!
A few years ago I wised up myself and upgraded to a cashback credit card. I currently get:
3% back on groceries (my biggest monthly expense besides rent)
2% back on gas (not that I need it with a company car)
1% back on everything else
Everyone can benefit from cash back.
Monthly Estimate of My CashBack benefits based on my budget of $1100 after rent:
$15 from Groceries ($500 X .03)
$2 from Utilities ($200 x .01)
$2 from Restaurants (200 x .01)
$2 from Misc (bars, household items, clothing, etc $200 x .01)
Total = $21
That’s $21 bucks free a month or $252 a year by simply sticking to my budget and switching to a credit card with benefits rather than simply a basic debit card.
Another huge benefit came when I realized I could put my graduate school tuition on my credit card. By putting$80K in tuition on this card (any paying it off right away) rather than paying by check I made an easy $80,000 x .01 = $800 bucks.
It’s a small benefit in the grand scheme of financial security but is a simple step that is worth it. Small savings and earnings habits over a period of time add up.