Saturday, July 7, 2007

Charging Everything

Like many PF bloggers, I have adopted strategies to maximize the power of my credit card spending. Basically, I charge everything from groceries to a Big Gulp at 7-11 on my Credit card.
Strategies I use to maximize the power of my credit card:
1. Gas Card gives me the largest discount on gasoline purchases.
2. Amex Starwoods gives me the option of converting points to airmiles or using them for hotel room stays. This is my primary card.
3. CitiBank AA Card – I use this card at places that don’t take American Express.
4. As you can see, I end up with three credit card bills each month.
a. All bills are paid using online banking services provided by ING Direct.
b. When the bill comes in, I transfer the cash from my primary checking account to the ING Direct account and set up online bill pay. With this strategy, I earn interest on the float and ensure the bill is paid on time.
5. By charging everything possible, I have reduced the number of bills I pay to the following.
a. Mortgage
b. Student Loans
c. 3 credit cards
d. Electricity
e. Telephone
f. Oil (in the winter)
6. All my cards (except the Citibank card) download to Quicken using the Update feature. Each week, I download the transactions. Since I tend to frequent the same places, most transactions automatically get categorized correctly. With very little “cash” going out the door, I am able to easily, quickly, and accurately track my spending against my budget.
Credit Card Arbitrage: Discover Card
• As an experiment, I tried to replicate the credit card strategies used by other bloggers. I took $5,000 in 0% interest from Discover in a free balance transfer. Ultimately, I deposited the money in an ING Direct Savings Account.
• Evaluation: I probably won’t repeat the transaction.
1. Discover tried to hit me with a Balance Transfer fee. It seems they took so long to process my application (about 2 weeks), the actual transfers took place after the eliminated the “Free Balance Transfers” promotion. Luckily, I had the screenprints from my online application and they corrected the mistake.
2. I don’t know if the money earned is worth the effort.
 Getting the transfers set up was a hassle.
 Tracking another credit card is annoying.
 Finally, I have to make sure I pay it off before the deadline.

3. I don’t feel comfortable with the ethics of this type of transaction.

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