This is how I maximize cash-back bonuses.

[GlockSpock]

As many of you have probably realized, I take great care to make sure I am getting my money's worth on any service I pay for, and try to be as financially responsible as a gun lover can be. So I figured that I'd pass along a tip that I use to maximize cash-back bonuses on money I do spend. I average $25-$50 cash-back bonus per month, depending on the month.

 

Interest rates on saving accounts are low. However, that does not mean you cannot make your money work for you! Most people tend to look at how to increase their rewards for saving money. That is important, but a point that is often overlooked is how to increase your rewards for spending money. Hi! I'm Matt, and this is how I spend!

 

First, let me breakdown the steps that I use:

 

1. Earn Money
2. Budget Money
3. Spend Money (on credit)
4. Pay Credit in Full

It is that easy!

 

Step 1: Earn Money

 

In order to have money to spend, you must first earn money. I work an 8-5 job five days a week, but your results may vary. Chances are that you are already doing this!

 

If you are not already doing this, might I suggest this link?

 

Step 2: Budget Money

 

I use YNAB. That stands for "You Need a Budget". That part is true. It is also true that YNAB is likely the most intuitive budgeting software that exists.I have tried many finance/budgeting programs, but I always ended up dropping them due to the fact that they never really changed anything. I like to think of it in the following way: Most budgeting programs are like a giant magnifying glass inspecting what you have already spent, and YNAB is like a giant telescope telling you what you are going to spend in the future.

 

I wont' get into too many details here regarding YNAB's "Four Rules", but essentially, it is important for you to budget your money so that you do not spend more than you make. It's that easy. In this particular write-up, we are attempting to maximize cashback bonus. In order to do that, we cannot afford to be charged any interest on our credit card. That would very quickly offset any cashback bonus we may earn during the month.

 

If you want to save even more money when purchasing YNAB, use a coupon!

 

$6 Off Coupon for YNAB

 

Step 3: Spend Money (on credit)

 

Placing all my purchases on a credit card to maximize cash-back was something I attempted several years ago. It ultimately ended with me spending more than I made each month, and then of course accruing interest charges on the card.  So I stopped this practice and started using my debit card for everything instead. However, once I started using YNAB, I then could safely put all my spending on a credit card and now is exactly what I do once again.

 

I have my internet setup on Discover. Anything shipped via USPS is paid via Discover. Anything I eat I place on Discover. In a few shorts words, if I can place it on Discover, I do. But since I have budgeted every dollar that I spend and stick to that budget very closely, I have never been charged interest on any of these purchases.

 

However, here is my method. Take advantage of any bonus programs that you might have. I get 1% cash-back on every purchase through Discover. However, I also get 5% through iTunes, 10% through Sears, 5% on fuel and so on and so forth. There is a huge trick here though. I am offered 15% cash-back through Groupon. Assuming that you are placing restaurants and other social things to do, focus on this. If you budget $300 for a month's worth of restaurants and then are able to spend most of that on Groupon for food deals, not only are you likely getting close to $600 worth of food, but you would also be getting close to $45 cash-back. That adds up pretty quickly once you figure in other possible cash-back rewards.

 

Your results will vary based upon your credit card, but I would highly recommend Discover. They generally have the highest cash-back rate, and have a special category for each quarter of the year (this quarter is 5% on fuel, next quarter is 5% on online shopping).

 

Become a Discover cardmember and you’ll get $50 Cashback Bonus with your 1st purchase within 3 mos.

 

Step 4: Pay Credit in Full

 

This part is easy. As long as you have stuck to your budget, you already have enough money sitting in your checking (or better yet savings) account. Pay your credit card off in full each month so you will not accrue any interest on your purchases.

 

Summary

 

Budget money before you spend it, place all possible purchases on credit cards that offer cash-back, pay your credit cards in full each month and then enjoy your cash-back rewards!

 

So, what about you? Do you have any tricks or tips for maximizing how well spent money works for you?

Edited September 11, 2013 by CZ9MM

[Mister L]

I've been using Discover for over 20 years and there's no telling how much cash back money I have earned. I do use it and keep it paid off. Nice tip.

[peejman]

I use my credit card for most everything these days.  While the cash back program isn't the best, I've had the same card for over 20 yrs and never paid a cent in interest fees.  Given the identity theft issues, I'd never use a bank card linked to my account.  My wife has a Discover card and does the groupon thing pretty regularly. 

[Oh Shoot]

I've used an ATT Universal Rewards card since about 1990. Has kickback awards as good or better than Discover cash back.

 

Generally just get a retail store card, used to buy geek stuff through Best Buy and etc, over last 6 or 7 years, bought lots of gunstuff/ammo through Walmart and Cabelas, etc.Or just general stuff I may need.  I put everything on it I can, which is most everything except utility bill and rent (really wish I could do those too). Heck, in the past, I'd sometimes buy stuff from Sam's, put it on eBay for what I paid, and often make more.

 

Amazon now takes the points on purchase by purchase basis too, don't have to wait till you hit the $500 increments, probably other places do too.

 

Anymore, I get maybe only about $300-400/year, but back when I had biz and spent a lot more, could be $1500 or better.

 

And as CZ9MM says, it's totally free money, silly not to take it, as long as you're only buying what you would anyway, and don't carry a balance over. Credit cards are great, as long as you don't actually use them for loans. :)

 

- OS

Edited September 11, 2013 by Oh Shoot

[npgunner]

the cashback bonuses are nice ...

but the main reason my wife and i use ours is so if our card does get stolen (at a restaurant, e-swiped online, or at a gas station), the money they take won't be missing from our checking account, rather from Discover. 

i've had this happen once with Discover, and once with the bank.  Too get the stolen purchases re-credited to the account was MUCH simpler (and immediate) with Discover than with the bank.  

... also, we get $50 bucks back every month and a half or so ... free money  :up:  :2cents:  :up:

[macville]

 

Amazon now takes the points on purchase by purchase basis too, don't have to wait till you hit the $500 increments, probably other places do too.

 

And as CZ9MM says, it's totally free money, silly not to take it, as long as you're only buying what you would anyway, and don't carry a balance over. Credit cards are great, as long as you don't actually use them for loans. :)

 

If any card offers points you can spend (just like with Amazon), don't spend them. ALWAYS take the cash. Why? Because if you spend the points, you don't get any cash back on that! So instead of spending points off my Amazon card at Amazon, I get a check sent to me for the cash amount and then use my Amazon card to make the purchase. That way I get 3x the points instead no points.

Also, it's not totally free money. It's actually YOUR money to start with. All they are doing is giving you some of the money back that they charge the merchant, who charged you. I actually wish that merchants had cash discounts for what they are charged for CC fees because I think you'd be better off.

[Oh Shoot]

If any card offers points you can spend (just like with Amazon), don't spend them. ALWAYS take the cash. Why? Because if you spend the points, you don't get any cash back on that!

 
Well, can't deny that with a cash back only card, good point. But with my card, I turn the points into retail cards anyway (as cash back option is a lower return rate), so it doesn't much matter when I use them as they are gonna get used at some point regardless.
 

Also, it's not totally free money. It's actually YOUR money to start with. All they are doing is giving you some of the money back that they charge the merchant, who charged you. I actually wish that merchants had cash discounts for what they are charged for CC fees because I think you'd be better off.

I get what you're saying about how it works, but you're getting it for goods and services you'd buy regardless, it really is "free money" -- to you as individual consumer. For example I haven't used anything but my plastic in supermarkets since they started taking it, and it doesn't make me spend any more on groceries than I would if using cash or check. Doesn't affect my restaurant frequenting habits either, which is actually quite rarely in the first place nowadays.

- OS

Edited September 12, 2013 by Oh Shoot

[vontar]

I just last month cashed in my Discover card cashback bonus.  It paid for my PMR30 and then some.

I cashed out 1,000.  been letting it built for like 10 years.

[Sam1]

99% of the time we just use a southwest card to pay for everything.  End up with around 100,000 miles a year which gets us about 10 one-way flights per year depending on where we go.

 

Other than that, we don't really do anything outside of not buying a bunch of junk we don't need.

[Glock30]

99% of the time we just use a southwest card to pay for everything.  End up with around 100,000 miles a year which gets us about 10 one-way flights per year depending on where we go.

 

Other than that, we don't really do anything outside of not buying a bunch of junk we don't need.

 

I came to say this. My wife and I got 8 round trips between us the first year (and the initial 50,000 point signup bonus) and continue to rack up points every month. Her family is 1,000+ miles away, so it makes all the sense in the world.

 

I've used cashback cards for years with great success. We use the card for everything - used to even pay my college tuition with it.