By Harry Stoll

One reason to use your credit card for as many purchases as possible is the rewards for using the card. But pay off your credit card each month, otherwise the rewards are for a fool in a fool’s game. The usurers say the more you spend, the more you save. Well, really, the more you spend the more you owe. Still, stay within your means and pay the card off each month, and the rewards are beneficial.

Frequent Flier Miles is one type of award. Another is the 1% to 5% credit cards reward for purchases. These started as percentages, so for every dollar you spent you got a credit of from a penny to a nickel. Then some of the card issuers got tricky and talked about “points” rather than percentages; although the numbers are similar, the card issuer sets the points’ worth.

Citbank in particular plays a shell game. A few years ago, they changed, and rather than getting a $25 check for 2,500 points it took 4,000 points. It gets trickier. Recently they offered a 5X times the 1-point per dollar of purchases, making it seem like 5%, but it takes 5,000 points to get a $25 check. That’s 2.5%. Perhaps still a good deal. The Citi card with this offer is the Diamond Preferred (they prefer you don’t pay it off). The 5X program ran through Sept. 2012, and probably will be repeated. Always make sure what a point is worth.

Chase Freedom Card changes rewards every quarter; in two of them you get 5% for gas, and in another 5% for groceries, and in another 5% at drug stores. Other purchases award 1%. You must have at least $25 coming to collect, but they pay to the penny so no unused points lie about. As with all cards, “purchases” include whatever you buy (but not balance transfers or cash advances). You have to sign up each quarter and they send you an e-mail reminder. You must have a Chase banking account to qualify for more than 1%.

Discover card for July-September 2012 offered 5% on gas, and you can collect in $10 increments. The awards change each quarter. October-December 2012, it’s department stores, no doubt aimed at Christmas shoppers. The awards are capped at $75. They offer a bonus if you use your points to buy a gift card.

Jumping from card to card could get tedious; Bank America offers a 3-2-1 card, with 3% for gas, 2% for groceries, and 1% for everything else. It doesn’t change from quarter to quarter.

Take advantage of these rewards but make sure you know if the points are percentages or are worth some other ratio.

A note: Recently, I said Provident Credit Union pays 2.26% on free checking accounts (with some easy hoops to jump through), but they could change it without notice. While cheering on the Giants in the Venezuelan World Series, I saw their ad, stating it is 2.01%. Still a good deal.

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By Harry Stoll

As a veteran of the Kredit Kard Wars, who is in the trenches, kicking sand in the bully’s face, I advocate using a credit card for every possible purchase. Hold it! This is not a run-amok license. You should stay within your means and pay the credit card off each month, and credit rating agencies get antsy when you exceed 60% of your available credit. So don’t.

Maybe later I’ll do a Suze Orman jaw torque and suggest how to tunnel out of credit card debt, but basically you have to find the way.

Once you’re paying them off every month, you’re in the catbird seat and ready to take advantage of The Float (the “grace period” to the usurers). This means you have from 25 to 55 days from when charges for insurance, utilities, TV/landline/cell phone/internet, newspaper subscription, broccoli, toothpaste, gas, bouef Bourguignon and pinot noir go on your card until you must pay the piper. (Some of these are discretionary spending so use discretion.) So, if your credit card statement closes on January 15, any purchases made after that go on the next closing date of February 15 and will be due by March 10.

So, in February any money you have in a checking or savings account remains there. Does this make your head hurt? Go over it in your mind. Draw diagrams. It’s real. But what makes The Float pay off is having an interest-bearing account that you can pay from a month later. This action repeats itself every month.

The result is you always have one month’s worth of those amounts in an interest-bearing account and get 1/12 of the interest each month.

Provident Credit Union currently pays 2.26%. (Although they can pull that rate any time, they’ve kept it for a few years. Your principal is federally insured. You have to jump through some hoops but they are easy.) There must be other accounts.

Making mortgage payments with your credit card is possible, but perhaps difficult. What a huge deal that would be. I’ll research it.

Now the amount you save by using The Float might not seem big, but as with much of Kredit Kard Fu, it’s incremental. Would saving of over 2% on your payments be worthwhile?

Another advantage of using your credit card is the awards they offer that vary from 1% to 5%. They can get tricky. I’ll explain them soon. Another way is getting an account-opening bonus, which I’ll also cover.

Using a credit card is to let the genie out of Pandora’s Box, so you’ve go to be prudent.

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