Do you carry a balance on one or more credit cards? Big mistake. The highest interest rate for borrowing money is on revolving credit. Way higher than mortgage loans, student loans or even used car loans. Let’s say you carry an average daily balance of $3,000 a month on a credit card. At the current average rate of about 13.5% you would be paying about $400 annually in interest. On the other hand, if you paid off your bill in full each month you could get a rebate on what you charge each month. Let’s say you had the self-discipline to pay off the $3,000 balance and instead charged an average of $3,000 each month that you pay in full. In that case, the card company or bank that pays a 1% rebate would knock almost as much ($360) off your bill annually. So what would you rather do, pay them or have them pay you? It’s your choice. Oh, and if you are buying gasoline, which already costs too much, you can generally get a 5% rebate with several cards. Please note, however, that rebates typically are NOT earned if you carry a balance.

Over the past ten years I have earned thousands of dollars from credit card rebates. Most recently when my daughter began attending an expensive college, I learned that they accept credit card payment of tuition. While I could not afford to pay off this kind of money from regular funds, it is not a problem to first charge the tuition. Then, using other college funds, transfer that money to the checking account that is used to pay the credit card bill. By “filtering” the tuition payment through the credit card account, I got a rebate of 1% on that bill. If you don’t want a cash rebate, you can earn other rewards such as airline miles. The principle is  the same–self-discipline. If you spend (charge) more than you can afford to pay off each month, you should run for Congress or the White House; those office holders know all about deficit spending. Otherwise, get a credit card that pays rebates and start earning rather than paying for the use of credit.