Yes… it’s a big one. And I confess that I walk around with it all day.
Honestly, if we could all just get rid of cash and pay with credit cards, like in this Visa ad, my wallet – and that bulge in my pants – could get a lot smaller (Insert snide comment about my manhood here). I have a love affair with credit cards – they’re compact, sexy, help you to rack up rebates, and build your credit score – which could save you tens of thousands of dollars if you ever take out a mortgage. Some people are irrationally scared of them (“them credit cards are the devil!”) only because they don’t understand how to deal with them. That’s stupid. Credit cards can totally work for you if you have a system that integrates them into your life.
So far, I’ve blogged about the essential credit card ingredients:
1. Set up automatic payments
2. Use cashback/rebate cards as much as possible
3. Limit your number of cards to 2 – 4
Today, I’m gonna talk about how to put all of ‘em together into a system, so you never ever have to worry about credit card admin ever again.
The sexiest credit card system you’ll ever use
1. Decide on the single most important reward you’d like to get out of your credit card, and pick a card that offers it. We’ll call this your SEXY IMPORTANT CARD (SIC). They could be anything, but you have to pick just one:
- Cashback – My personal fave, so I don’t have to figure out how to spend my points before they expire, and it’s like getting a discount for everything I buy.
- Airline Miles – if you travel a lot
- Random dining/shopping rewards
2. Channel 80-90% of your spending towards your SIC to maximize the rewards that are the most important to you. Literally try to spend everything on this card: wining and dining, shopping, toothpaste, major purchases and gifts, and Oompa-Loompa slaves.
3. Pick 1-3 other cards which will allow you to enjoy any exclusive credit card benefits not covered by your SIC. We’ll call these your AWESOME BENEFIT CARDS (ABCs):
- 1 Visa and 1 MasterCard should work just fine for most people – I advocate having at least one of each because they’re the most general purpose and widely used, and you can take advantage of Visa-only or Mastercard-only promos if you come across them
- I hardly ever charge anything to my ABCs. I keep them strictly to enjoy any exclusive card benefits that my SIC isn’t eligible for.
- Don’t fall into the trap of opening too many new ABCs – read my post on limiting your number of cards.
4. Keep your ABCs active by directing a small, regular, recurring charge to each of them.
- This could be as tiny as a monthly $5 magazine subscription. I have 2 ABCs – I direct my $20/month phone bill to my Visa and my $100/month transport charge to my MasterCard.
- The main idea is to keep your ABCs active – this lets the card companies know that you’re alive, which makes it easier for you to negotiate for fee waivers and credit limit raises when you need them.
- More importantly, it builds your credit history – a long repayment history on these cards (even if it’s just $5 every month) will help to boost your credit score, as long as you pay them off on time every month.
5. Arrange for automatic payments for your SIC and your ABCs so you never miss a payment.
That’s it! This system will concentrate your spending on your SIC, accumulating rewards where it matters most to you. Your ABCs will give you the flexibility to enjoy whatever benefits that come your way which isn’t covered by your SIC. And automatic payments will ensure that you don’t have to deal with all the damn admin that comes along with paying those bills. (The only bit of admin that you do have to do is to check your monthly statements to ensure that there aren’t any suspicious charges like HOOKERS on it. But that shouldn’t take you more than 5 minutes every month)
Sexy and you know it
Credit cards are getting more general purpose these days. Visa has a wave and go option. If you’re Singaporean, some cards double up as an EZ-Link card (to my overseas friends – what we use to ride our subways/buses). We might eventually not have to use cash in the future, and be like this guy:
In the meantime, try my system out, and let me know if it helps you out.
