Last summer, I blogged about how I upgraded one of my credit cards by cancelling the old one and applying for one with higher cash back.
My campaigns were starting to skyrocket at that time, especially my spending (my ROI wasn’t so great!), and I wanted to take advantage of all the paid traffic I was purchasing with my credit card.
The post explains that the best card I could find at the time, for cash back (I don’t travel enough for a travel card to be worth it to me), was 1% (save for a somewhat sketchy 1.5% card which I opted not to try) – credit card perks in Canada are nowhere near as good as those in the States.
My old card was 0.5% cash back and had an annual cap of $250 (in refund), so that was definitely a pretty pointless card to have. My new one was 1% with an unlimited cap, although with an annual fee of $100 per year.
My Cash Rebate
I received my new credit card around May 2012 and have been using it ever since.
About 7-10 days ago, I received my first annual cash back cheque from Visa on this credit card. It is for the period of May 2012 through to the end of the year, and is exactly 1% of the total balance of all the transactions I made on the card during that time.
It ended up at $3,301.99:
While my "rebate" was for $3,301.99, I actually ended up making $3,201.99, after you factor in the $100 annual fee. It’s an important note to make, as it means that you probably only want to get this card if you spend at least $10,000 per year on your card in order to pay off the annual fee (although, I do have a lot of other perks with the card too such as auto perks and travel insurance).
Simple math will show that I ended up spending $330,199 on my Visa during the 8 months from May 2012 to December 31st, 2012, or an average of around $40,000 a month.
Never Spend What You Don’t Have
The point of this post is to show how credit cards are absolutely wonderful things to have as long as you aren’t careless or reckless with them.
I’ve seen too many financial shows or news programs where people bash credit cards and point to them as evil, when the fact is that credit cards are awesome as long as you don’t spend what you don’t have.
It actually kind of boggles my mind that some (a lot, perhaps the majority?) people put transactions on their credit card when they don’t yet actually have the money to pay for it. To actually buy "on credit", rather than use the credit card like a debit card where the money is coming straight out of your bank account.
It’s all part of the new "instant gratification" and "entitled" culture. Everyone thinks they deserve the latest car, Apple device, and smartphone. Nobody wants to wait or save up for anything anymore.
Basically, as long as you use a credit card as if it were a debit card, you’ll be fine. Most of the time, I actually have a negative balance on my card because I always overpay/prepay my bill/account. I never use my credit card if I don’t have the actual cash in my bank account to pay it off.
I never use my credit card for actual credit, but rather just as a payment tool to purchase things online – just like I do with PayPal. That, and the fact that I get rewards as well – that’s just a bonus.
Credit cards aren’t evil, they just take advantage of greedy people. And that is why I never feel bad for anyone who is in debt with their credit card company. It’s also why I don’t jump on the bandwagon and call credit card companies evil.
Anyhow, my rant is over. It’s just a big pet peeve of mine how everyone seems to have a new car, go on a lot of vacations, and have the latest gadgets and then complain that they don’t make enough and are in debt.
I Want a Bigger Cheque!
Getting back on track, my first Visa cheque was for $3,301.99, which is great, but I want my next one to be even bigger.
It’s far too early in the year for me to be able to accurately predict what my next one will be, but unless things really slow down for me, I expect it to be at least double. I should end up spending at least $700,000 on my card in 2013, which would be a $7,000 cash back cheque.
But hopefully things continue to improve and I spend over 1 million dollars during the year, which is currently looking pretty attainable/likely, which would mean a $10,000 cheque!
Hopefully one year from now when I publish an update to this post, I’ll be showing a 5-digit cheque instead of 4!