Its Pay Back Time! Getting Even with the Credit Card Companies

By Stacy B 04/28/21

When I began to work in my teen years, the most common financial advice I received from the older generation was to open an interest-bearing savings account and deposit a portion of each paycheck into the account so that my money could earn money. The second piece of advice I received was to get a credit card to build my credit score so that I could buy a house someday.

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                I remember how excited I was to open that savings account and every week I deposited a portion of my paycheck in the account. At the end of the year I had earned $5.70 in interest, which was equivalent to less than one hour of work at that time. Needless to say, I knew that was not the way I was going to build wealth. Furthermore, the credit cards didn’t build up my credit score as much as it built up my debt. After four years I stopped paying on them because they were taking all the cash I had to make the minimum payments and I did not have the cash to cover my needs.

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               Today, the rate of inflation surpasses any rate of interest that a bank offers on saving accounts, which means every year it takes more dollars to buy the same goods and services that were purchased the year before. The value of any money sitting in a savings account loses its purchasing power as it sits there and paying credit card interest on those goods only increases the price of those goods and services.

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               While raising the children and managing a home, I looked for ways to spend less on the items we needed and learned to financially plan to meet our future needs. I paid cash and used coupons, waited for discounts and sales, and purchased household items and clothing in the off-season. As the quality of household goods decreased over the years I began to buy second-hand and over the years I developed a habit of avoiding paying retail prices altogether. After all they are really only suggested prices and not the actual value of an item.

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               When I was self-employed in 2010, God really began to urge me to clean up my credit reports. The process lasted four years and turned out to be an opportunity to reflect on the spending habits I had when I was younger and how much they had changed over the years. Even though I had changed, I held a grudge against the credit card companies for taking advantage of me as a young adult. However, paying off the old debt still on my credit report was just another part of the amends’s process I had to do even if it was done grudgingly.

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               Of course as the old debt fell off my credit report credit card companies began bombarding me with unsolicited offers. Each offer was immediately tossed in the trash. I was convinced that was not a road I was willing to travel again until one day in June 2012, when I was purchasing office supplies on a website and an offer for $100.00 immediate cash back was presented to me at check-out just for applying for a credit card.

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                I looked at the total in my cart and saw that almost the entire purchase (except for $8.82) would be covered by the offer if I would just apply. The bargain hunter in me could not pass up the offer to buy 49 printer ink cartridges (a year’s supply) for $0.18 each. As I filled out the application I knew I had no intentions of using the card again if I were approved.

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                I didn’t know the purchase would begin the journey of credit card companies paying me back for all the interest I had paid over the years. Yes, they were going to pay me back and pay me for using their card.

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               I have one credit card that paid me an average of $45.00 per month to use the card for business expenses last year, and a second card from the same company that I used for my personal expenses that paid an average of $10.27 per month, totaling $55.27 per month, or $663.24 for the year just for using these two cards. I have had one card for nine years and the second card I have had for three years and have never paid interest or fees on the cards because the statement balances are paid off each month.

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               In 2020, the cards allowed us to lower our cost of replenishing inventory by 8.65%, which meant lower prices for our customers. Yes, we passed along that savings to our customers!  But that is nothing compared to what we saved on startup costs in 2019 and the remodeled our home in 2017-2018.  

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               The best cash flow management strategy is to use the cards for purchases that were/are going to be made anyway. Using credit in this way has allowed my credit score to improve significantly. Averaging at least 790 every month, while being paid when I have to spend money.

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               I still do my due diligence to ensure we pay the lowest price available and to only use credit cards to further decrease the final price of each purchase and increase the amount of time I get to hang on to my cash in the bank. I also made it a habit not to use more than 10% of the credit issued to me so if I need to increase my credit score immediately I just reduce the credit utilized to 5%, which brings my score up into the 800's.

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               Today, because of the financial discipline I developed over the years, credit cards are an essential part of cash flow management in our business and my personal life. That is a major paradigm shift from what I use to believe about credit cards.