Using a Credit Card Bonus Program As a Purchase Tool

Recently, I’ve begun using a credit card with a useful bonus program as my tool for making small, regular purchases. I did this after finally climbing out of a significant hole of credit card debt, reaching a zero balance on every one of my cards.

When I began using the card for this purpose, I justified it by saying that I would only use it for necessary small purchases, such as groceries, automotive needs, and so forth. Then, I would pay the entire balance each month and thus utilize the grace period to avoid any finance charges, and thus the bonus program would simply be a useful profit on the situation.

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Another benefit is that it made monthly budgeting much easier. I could literally take the balance of my primary checking account at the start of the month, work out the required payments down to the cent, and then not have to worry about overdrafting or such things in the event of minor emergencies.

However, there are some drawbacks to this setup. The biggest drawback is that I make it very easy to continue to live above my means. I’m still paying for things using plastic, a habit that got me into dangerous financial territory before. Even now, I’m often tempted to just use the plastic to buy something I want and then have my “future self” pay for it. Thankfully, I’m able to resist those demons.

A second drawback is that I have another variable bill that I need to pay on time. The amount of the balance on the credit card varies quite a bit from month to month. Even with my budgeting, I can’t always account for several additional costs in a single month (like last month, when I had gift expenses and a lot of extra automotive expenses). In the past, I would just write a check to pay for these things and have the overdraft protection save me, or else I would put it on plastic and pay finance charges until the end of time. Now, my more responsible attitude requires a lot more finesse.

Is it really worth it? Overall, it is, if I can maintain my financially responsible mindset. In a financially healthy environment, a credit card is just a tool to smooth out some of the kinks of monthly budgeting that can sometimes give you a nice bonus. If I can keep this in mind, I’ll be just fine.

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Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.