Tuesday, January 27, 2009

We Love Our Credit Card

This month our USAA credit card distributed our annual cash back rebate. It came to $478.40. That's a very nice chunk of change that falls like a gift out of the sky. We charge most of our expenses on our credit card, and pay it off in full every month. Additionally, my husband charged tens of thousands of dollars of business travel expenses on the card last year, all of which he was reimbursed for. We get a tiny portion of those charges kicked back to us in by way of this rebate. The card has no annual fee, and right now the APR is only 4%. I had to look this up because I never pay any attention to the APR. Not having to think about the APR is a nice perk of paying off our balance each month.

January is a nice time to get a little extra cash. Some might use it to pay off holiday gift purchases. Others (*cough*) might stuff it into their heating oil tanks. It's less than a 1% rebate for all the charges we made with the card, but given that the card doesn't cost us a penny to carry and use, I don't see any downside. We likely won't get anywhere near this much back next year since my husband will be traveling much less for business.

Now USAA offers credit cards and other financial services only to its membership. You become eligible for membership through military service in the US, or by being the child or spouse of a member. Obviously, this is means a lot of people are not eligible. But if you are eligible, you'd be crazy not to avail yourself of this fantastic resource. USAA offers the best customer service I've experienced from any business, ever. But there are other cash back credit cards out there.

Credit cards, like any other tool, can be used or abused. When your financial house is in order, it's possible to make this tool truly work for you. Even if we had missed paying our bill on time once or twice during the year, and incurred some interest, plus late fees, we still would still have come out ahead with this cash back card. On the other hand, if we were carrying a large balance month after month, the $478 rebate would quickly get eaten up in fees, even at the very low APR of just 4%.

If your finances are in good shape and you trust yourself not to rack up a balance you can't pay off, I recommend looking for a good cash back card with no annual fee. So long as you pay your bill on time and in full each month, you'll see a nice rebate once a year. It's sort of like getting a tiny discount on everything you pay for by using your card. And if you're doing a lot of reimbursed business travel you should definitely get a little something back, besides useless frequent flyer miles, for all those nights away from home.

3 comments:

Tracy said...

We have our car & home insurances through USAA. Congrats on the cash back! :)

DennisP said...

My wife and I are in very much the same situation as you and your husband: debt free and only a few dollars left on our mortgage (we'll have it paid off in a couple more years). Only a few hundred dollars on our ever-so-handy credit card. And we pay it off to the penny every month. And in the current economic climate, I'm so very, very glad of this. I hear many horror stories of people caught in financial traps. The frugal life is much better for my peace of mind than trying to live on the financial edge.

Kate said...

Thanks, Tracy.

Dennis, it sounds like you're way ahead of us on the mortgage repayment. We're happy with our progress. But just over two years into a 30-year loan, we have a long way to go. If we stop making extra principle payments right now, we'll pay off the loan in 17 years. And given the uncertainty of the job market, we aren't counting our chickens before they hatch. But good for you on having your financial house in order!

-Kate