I have a credit card that I use all the time.  Why?  Because I get a cashback reward that I use for other things.  So how do I actually  use my credit card?

I pay for certain bills with it.  Why not all bills?  Some of my bills charge a fee when using a credit card.  For those expenses, I use my checking account.  I won’t pay extra for the privilege of using credit.  Sometimes, I charge gas and/or groceries on it.  But usually I just pay for those things.  For those expenses that allow me to use my card without an extra charge, I pay with credit.  Over the course of a year, I build up a substantial cashback balance.  I transfer it into a high interest savings account to let it accrue interest throughout the year.  Thus my free money makes more money.

I use my cashback money for a couple of things throughout the year.  The first thing I use it for is my virus checker subscription.  This saves me about $100/year.  The second item I use it for are my streaming services.  I pay annually for all but one of them as the “one” will only accept a monthly payment.  That “one” is factored into my monthly budget.  Then I pay for my three streaming services annually which makes them free to me.  After all, the funds that are used to pay for them came from free money.  And the best part is that I usually have a little money left over after paying for everything.  That becomes seed money for the next year.

When the annual payments are due, I use my credit card to pay for them.  That creates cashback payments for those items.  Then I pay them off using the cashback funds I have saved.  Free money generates more free money which pays for those items.  Definitely a win/win.  But, you MUST pay the card off every month or the interest you pay will make it a lose/lose.

Moral of the story:

If you have a credit card that offers cashback, save it up for the year to pay for annual expenses. You could use it to build your emergency fund, put it in retirement, pay down your mortgage, etc.  Just make sure you keep your card paid off every month.  That turns your credit card into a debit card with benefits.  I prefer having cold, hard cash to spend as I choose over a reward.