Every Tuesday, Smithee presents an article about his own experiences with credit cards and observations about the credit card industry.
Two weeks ago I introduced you to a new credit card that offers 2% cash back that is deposited into a brokerage account. Then, a few hours later, I applied for the thing. In my experience, online credit card applications always say, “get a decision in minutes!” and then they feign some sort of technical difficulty, so you have to wait for the mail, anyway.
This was no different. But waiting didn’t matter, this time. Because for once, I had no plans to use the card to “extend” my “buying power.” I’m just using it for the rewards.
I’ve long scoffed at those commercials for credit cards which advertise “rewards”, internally thinking, “Sure, whatever, airline miles. But what good is it if you’re spending $100 a month on interest?” For years, that’s what credit cards were to me: devices that stole your current money because your previous self wanted to go out to dinner instead of eating soup at home.
I had $0.20 when I graduated college. But at least I got to go to college. I found a job quickly, but getting there meant spending money that I hadn’t earned yet. And the job did not pay well. Overwhelming credit card debt kind of snowballed from there. That was 11 years ago.
But later came ambition, smarter living, and marketable skills. Now I’m able to pay off my remaining credit card debt (roughly $6,400 right now) at a rate of $1,000 / month. It’s on a 0% card. I never charge anything on that card. But I do still pay for things. I set aside a little bit every month for lunch and movies with my wife. And lots of dog food.
So, I figure now’s an okay time to start getting in the habit of paying off one card in full every month. If it means 2% of what I’m charging gets redirected toward our future by way of investments, I can be that smart. The problem now is that I have to start learning about investing. But 2% back on my monthly charges will probably give me about a year before I have enough to buy a single share of anything. Got any advice for me that will still be good a year from now?
Updated June 24, 2016 and originally published December 23, 2008.
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