Getting the Most from a Credit Card.
Is it possible for ordinary folks to ever come out ahead when choosing and using a credit card?
Probably not, but when it comes to our credit cards, my wife and I are basically in it for the miles. If you live on an island 2500 miles from the U.S. mainland, airline miles are a big deal. Our primary card gives us American Airlines miles; our back-up card gives us Hawaiian Airlines miles.
To accumulate as many miles as possible, we charge everything: groceries, gas, restaurant meals, our monthly DirecTV bill, Netflix movies, lumber for replacing rails on our pasture fence, vet bills for the two horses (ka-ching, ka-ching) . . . everything. If they’ll take credit cards, we charge it.
It pays off, too. I use miles for at least one round-trip to the mainland every year and, depending on where I’m going and the time of year, that’s worth anywhere from $700 to $1200.
Then, a few years ago, I took the time to read all the terms and conditions for our primary card and it was an eye-opener. It turns out that the premier cards—typically, cards that have an annual fee of $100 or more—offer some of the same protections you get with a travel insurance policy. And there are other benefits, too.
Take the pricey Mississippi River cruise my wife and I took several months ago. If we had had to cancel at the last minute for whatever reason, our credit card would have reimbursed me for the cost of the the non-refundable cruise tickets as long as I had paid for the cruise with their credit card. (I did, of course, because I want all those miles!)
And I don’t need to buy the expensive collision insurance the rental car companies offer. As long as I charge the Avis car to my credit card, the card will pay for the damage if I have an accident.
Finally, my monthly itemized statements provide important records for deductible travel and medical expenses. plus all of our charitable donations.
There’s just one cast-in-concrete rule which, if broken, causes the entire scheme to collapse: the entire credit card balance absolutely must be paid off in full every month. Every dime, without fail. If you don’t, you’ll be hammered with outrageous penalties and interest charges that will quickly take you from staying ahead of the game to quickly falling way behind. Anyway, this is what’s been working for us.