Wednesday, June 25, 2014

Free Bank Bill Pay And Credit Card Rewards

Four years ago, I switched as many of my monthly bills to be paperless as possible. As part of that switch, I also signed up for free online bill pay though my credit union. I've since found that the use of online bill pay makes it very easy to take advantage of credit cards that provide rewards for spending.
Personally, I like the rewards offered by the Starwood American Express card. Not only can you redeem the points for free nights at Starwood brand hotels (Sheraton, W, Westin, and Aloft to name a few), but you can also redeem them for frequent flyer miles for almost any airline. So I try to use this card as much as possible. Of course, carrying a balance on a credit card will cost you money and with an interest rate of around 15.9%, this card isn't one of the lowest rate cards around, but if you have the discipline to pay off your balance in full each month, you can rack up some good rewards. (This card does have an annual fee, so you'll also want to make sure whatever benefits you get from it are worth more than that annual fee.)

This is what I do: Each week, I use my reward card for all my spending - gas, groceries, eating out, everything. I log all my expenditures in my phone app as I spend. Sunday night, I look at how much I charged to the card that week, then log into my online checking account and schedule a payment to my credit card for that amount. I usually schedule the payment two weeks in the future because that keeps the money in my checking account earning interest (albeit, a tiny amount) for a while and the credit card is paid before I start accruing interest on the charges. (Most credit cards have a 30 day grace period before they start charging interest.)

Note that this only works if you do not carry a balance on your credit card however. If you do carry a balance, your credit card will charge you interest on your average daily balance, so you'll start being charged interest from the moment you make a charge, which will probably end up costing you more than any rewards you might earn. If your bank also charges for each online bill pay transaction, this may also end up costing you money.

Because the card I use is an American Express card, I can even use it when I buy groceries and gas at Costco.

Using this method, I've racked up enough points for several free hotel stays,  the latest of which will be happening tomorrow. We're taking a cruise to Alaska, which departs from Vancouver, Canada. We're flying up a day or two early to see a bit of Vancouver and I used points to get our hotel room for free!

The other reward card I like is the Chase Freedom card. You get 5% cash back from certain vendors / purchase types that vary by quarter and 1% cash back on everything else. There is no annual fee. I also got a 0% interest rate for the first 15 months of use. I've only had this card for two months, but so far, I've been happy with it.


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