One Crucial Question to Consider Before Playing the Credit Card Rewards Game

Oh, the credit card rewards game… It can take the form of credit card churning or travel hacking. Many people in the FI blogosphere, as well as consumers, participate in the game by using credit cards to buy gas, groceries, or other necessities in order to earn points or cash rewards.

Tatiana, too, has been using credit cards for rewards since the beginning of time, but one detail that should not be overlooked is that she never carried a balance.

The “disease”

Applying for credit to earn rewards is an exciting game in which you play confidently because you expect to beat the banks at their own game. If you’re known for carrying a credit card balance, you should ask yourself this question before applying for the next credit card offer: Am I cured?

Are you free of the bad habits that got you into credit card trouble in the past?

If you are the type of person who: feels the need to impose shopping bans in order to reduce your spending, considers shopping to be a recreational activity, or leaves stores with impulse purchases, you should probably avoid signing up for credit card rewards programs. These are indications that you still believe that happiness can be obtained through shopping and materialistic positions, and you may be burned if you play the game.

I got burned before by credit cards

When it came to credit cards, Tatiana and I had very different experiences. Unlike her, I paid interest for many years because I carried balances. When I was 20, the banks approached me, and it wasn’t long before I was using credit to fund my college lifestyle.

Do you need a shirt for the weekend party?

Charge it!

Do you need to pay for a flight?

Charge it!

Don’t have enough money to cover all of the semester’s books?

Charge it!

You don’t have enough money for home repairs?

Charge it! So on and so on…

The treatment

For 17 years, I played that game and lost. Finally, I realized I was in serious debt and began to understand one simple concept – that material possessions were not making me happy – I began to pay off my accounts and became debt free almost three years ago.

I’ve paid off all of my credit cards before, so what if this is one of those times when I’ll charge again? This time felt different to me. I confronted all of my financial demons and was cured as a result. I had to set budgets and stick to them, but in the end, I didn’t want to buy something just for the sake of buying it.

A fresh start, free of debt

After I paid off all of my credit card debt, I had no desire to use credit cards again. During my debt elimination process, I paid for everything with cash or debit and planned solely with the cash that was available.

Then there was Tatiana, who had never had the debt disease and had a different credit card experience. She liked the benefits of rewards and wanted to keep using them. She suggested that we use credit cards for everything in order to continue accumulating points.

Please, not again

I had fallen for the credit card trap so many times before that I was hesitant to fall into the cycle of paying off the balance and then carrying a new balance as a result of financial irresponsibility. The thought of purchasing on credit left a bad taste in my mouth.

I’d just gone through one of the most significant financial transformation of my life. This was a life-changing event for me, and her mention of using credit cards to pay for all of our transactions sounded like inviting an alcoholic to a daily drink at a corner pub.

Finally, we reached an agreement!

I became a user, or rather, an authorized user, on the condition that she check the statements accurately for all transactions and schedule monthly payments on the full balance due.

The cure

After our first year of budgeting together, I realized that I wasn’t making credit-card impulse purchases, or finding “needs” to fulfill, or urges to use the available credit. I finally realized that the available credit was not an extension of my wallet, but more importantly, I was cured.

I was only purchasing items that added value to our quality of life, and the majority of those items were not purchased with money. They are purchased with time. That is why we are on this quest to reclaim our time by achieving financial independence.

The compromise that my wifey and I made regarding credit card transactions worked! And it worked because the cure brought with it the ability to manage credit responsibly. What a liberating experience!

For the first time, I saw how credit should be used properly. It wasn’t what I learned in school that helped me understand the subject better. I had to learn the hard way how to manage debt and personal finances.

Tatiana handled credit card transactions and payments during our first year of marriage. I also noticed a new source of income on our Mint account for the first time: credit card rewards! Wow, in our first year, we received a cashback of $788 simply for playing the game correctly.

Paid to play

I’m finally getting paid to play the game, but I may never recoup the thousands of dollars I paid in interest. If I had all of that money compounding for me over the years, I would have been FI by now. But I don’t dwell on what could’ve been and instead move forward with valuable lessons.

I’m one of the fortunate ones who, through hard work, have become debt-free and thus financially fit to play this game. Most people will never recover any of their interest losses, and if you tend to carry a balance, the rewards game is not designed for you to win. The house will win in that case.

Proceed with caution

I play the game with my life partner, but I never forget that I used to have the debt disease, and that habits never die; they are simply replaced by new ones. They can always return; the key word here is to proceed with caution.

We’re just getting started with travel hacking, and she’s already applied for three travel rewards credit cards. We’ll keep you updated on how that goes.

Spend more with plastic?

I’ve read before that using plastic instead of cash causes you to spend more money. We’re not your typical consumer anymore, so I don’t think that would apply to us, at least not in a significant way. I know that if we pay in cash, we’ll probably spend less, but is that a path we’re willing to take?

Since most of our expenses are optimized, going that route would most likely transform us from frugal to cheap people. We would probably not buy certain organic or higher quality products because our goal would shift from getting the most bang for our buck to leaving the store with the most money in our pockets, resulting in more processed food.

Now, I’m not advocating for the abolition of the all-cash system. We pay local businesses with cash. I believe that cash is beneficial to many people and can help them gain better financial control. It’s just not the best system for us at the moment.

There’s also the time commitment required to keep track of all of your expenses. Manually entering daily transactions on a spreadsheet takes a significant amount of time. Mint handles credit cards and all electronic bank transactions automatically. All we need is a weekly check-in to monitor and categorize any transactions that require attention.

So, if we spend a little more because we use plastic, we certainly make up for it in cash rewards and time saved by not having to manually track our expenses.

Consider these before playing the game

If you decide to play the credit card rewards game, make sure you have a game plan in place and concrete answers to critical questions like:

Is it possible for me to pay the balance if I lose my source(s) of income?

Do I comprehend the underlying factors that led me to carry debt in the past?

And don’t forget to ask yourself, “Am I cured?” Because as long as shopping is your source of happiness, you’ll lose the game and the rewards won’t be worth it.

What advice would you give to someone applying for a credit card in order to earn rewards? How have credit card rewards served you?


After dedicating 13 years of his career to Vanguard, José retired from the corporate world at the young age of 44. During his tenure at Vanguard, he expertly coordinated the production of both electronic and print educational materials for 401(k) participants. Now, he relishes in his early retirement, cherishing time spent with his family, indulging in his favorite hobbies, seeking out new experiences, and savoring meals in the comfort of his own backyard.

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