I am delighted to say that I am a credit card deadbeat! In fact, some of you might already be credit card deadbeats too, if so, I commend you for your excellent work! Now, as for those who don’t know what a credit card deadbeat is, before you start thinking I have a screw loose, you may want to continue reading!
When I say that I am a credit card deadbeat, I don’t mean that I avoid my credit card bills. To the contrary, a credit card deadbeat is the insider term used by credit card company executives and refers to all of the credit card users who pay off their bill each month promptly; in doing so, such customers pay no interest and prevent the creditor from making any profit! That’s me! I love being a credit card deadbeat!
The alternative to being a credit card deadbeat is what credit card executives call a revolver. A revolver is a credit card user that constantly carries a balance and is charged regular, monthly interest on their charges. Credit card companies love revolvers because they, in essence, increase the bottom line for the credit card company and make them a nice profit. Further, from an insider perspective, the best customers not only carry a balance, but also make their payments late, triggering extra fees and a higher interest rate.
Okay, so I’ve been a credit card deadbeat for awhile now, but last year I went even further in improved my deadbeat ways. Not only did I hang onto my hard earned cash by refusing to line the wallets of the credit card companies, but I also happily lined my own wallet with their money, to the tune of $1,402. Yes, that’s right, they paid me $1,402 to use their cards; continue reading to find out how!
Cash Back Credit Card
First, I applied online for a Cash Back Credit Card and I was instantly approved. My new cash back credit card arrived to my house the following week ready for me to use. This card offered me 0% APR for 12 months and carried no annual fee; With it, I made all of my gas purchases, as well as grocery and drugstore purchases and earned 5% back cash back on the gas purchases and 1% back on all other purchases. I have a family of four and the gas purchases included gas for my spouse’s car as well. My average monthly purchases and cash back earnings were as follows:
Monthly Gas Purchases $325 x .05 = $16.25
Monthly Grocery Bill $1,200 x .01 =$12.00
Monthly Drugstore Purchases $160 x .01 = 1.60
Total Cash Back Earnings From Credit Card $ 29.85 x 12 = $358.20
Airline Rewards Credit Card
I also applied for an airline rewards credit card and again was instantly approved online. Like the cash back credit card, my new airline rewards credit card arrived the following week, came with a 0% introductory APR for 12 months and had no annual fee. This credit card earns 1 frequent flyer mile for every $1 charged.
I charged many of my miscellaneous expenses, including major purchases and business expenses, on my new Airline Rewards Credit Card. As a result, the qualified expenses came to an average of $2,250 monthly or $27,000 for the year, earning 27,000 frequent flyer miles, more than enough for an airline ticket to Hawaii: a $500 value!
0% Introductory APR for 12 Months
Now here’s the kicker. Since both credit cards came with a 0% introductory APR for 12 months, I paid only the minimum payments on each card and placed the money for my purchases into a savings account earning 2.5% (rates have gone up since). Using averages for simplicity, I made 12 monthly deposits of $3,935 into a savings account earning 2.5% interest compounded monthly. By the end of the year, I earned $544 in interest!
My Total Credit Card Earnings for the Year
So here is my total earnings from the cash back credit card, airline rewards card, and interest earned.
Cash Back 12 x 29.85 = $358
Free Airline Ticket $500
Savings Account Interest $544
Total Earned $1,402
Just to make sure I maintain my deadbeat ways, now that the 0% introductory rate has expired, I’ve paid off my balance from the money I deposited into my savings account during the year. To be a credit card deadbeat you need persistence, determination, and discipline. I did it, and so can you!
A lot of small to medium-sized business owners use credit cards in the course of business. The problem is, many make the mistake of using their personal cards. There are a couple of major problems with this:
First, if you use your personal credit cards for your business you are blurring the line between business and personal finances. The better separation you can achieve between your business finances and personal finances, the better off you will be. For this reason, a credit card in your business name is the best route.
Second, using your personal cards for your business puts your personal credit at risk. If the debt belongs to the business, shouldn't it be on the business' credit?
Most people don't think this is a big deal until they run into problems and no longer have their personal credit to fall back on.
In one example, a couple in business together racked up over $ 100,000 of unsecured debt on their personal credit for their business. When the business's income dropped, even though the business was at first able to stay afloat, the couple was forced to file for bankruptcy.
With their personal credit destroyed, they could no longer get credit to support the business - and the business went through some serious struggles as a result. The stress took a toll, and the couple is now divorced. Perhaps things might have gone differently if they had depended on business credit rather than their personal credit.
Maybe you're thinking that your company won't struggle, or that you don't use credit cards much anyway. What's the point, then?
Using a business credit card in your business does offer some real advantages aside from the two that were already mentioned. For example:
1. Streamline operations and automate expense tracking. Paying expenses can be much easier to manage with a business card, and reports can be generated monthly or annually in many cases to help categorize and analyze expenses.
2. Business cards have "rewards" programs too! If you have a lot of regular monthly expenses for your company that can be paid with a rewards card, you could easily get $ 500 to $ 1000 per year (or more) in cash rewards, or even free airline tickets if you use a travel rewards card .
3. Manage employee spending. Business credit cards can be set up to have spending limits for employees, which can aid in managing expenses for in-the-field employees.
4. Using a business card helps you build credit for your BUSINESS, which is of utmost importance in today's economy.
As you can see, there are several big advantages to using an actual business credit card for your business.
A helpful hint for those wishing to establish business credit: Try to get approved based on your business's creditworthiness rather than your personal creditworthiness.
This means avoid providing your social security number on credit applications for your business credit card. If you don't get approved based on your business credit alone, then you can try applying and include your personal credit information as necessary.