The good news seems to keep rolling in. Today, when I went to check my mail, I see a letter from TD Visa. Inside was a check for $1,030.65. The amount represents the yearly “dividend” I earned for using my TD Gold Elite Visa. My Visa is known as a cash back credit card. In this case, it gives me 1% cash back on everything charged.
Someone with a quick mathematical mind (or a calculator) will be able to figure out that in order to earn $1,030.65 in cash back dividend, I had to charge $103,065.00 to my Gold Visa in 2006. This begs the question; how much did I spend eating out? Well, many charges are business related. All TTZ related travels are charged to the Visa, along with cost of hosting the TTZ network servers and other business expenses.
I always charge purchases to my Visa card if a merchant accepts it. Yes, I can pay cash for it but why would I if I can get 1% cash back? This is the smart way to use a credit card. Instead of paying cash, you charge it, earn 1% cash back, or some other reward (like Air Miles), and pay the card off when the bill comes.
You have to be very careful with reward credit cards however. They can twist your thinking – instead of thinking how much something cost, you start thinking how much cash back you’ll get and forget that you have to pay the bill when it shows up. Do too much of that and you’ll soon find yourself running a balance and incurring interest charges, which will not be offset by any reward you will get. This is how people fall into the credit card trap.
Although I charged over $100,000 to my Visa last year, I am happy to report I was able to pay off the full balance every month and incurred zero interest charges. Now I have to decide how I’m going to spend this check. Valentine’s Day is coming up so I may blow it on a huge night on the town with Sarah.
I will charge the night out on the Visa of course. 🙂