I'm giving something consideration and would like advise on it.  My husband and I are both fiscally disciplined, budet, pay with cash, save for vacations, never have credit card debt etc...  I have been thinking about the idea of using a credit card of my grocery and gas purchases in order to earn the 5% cash back.  I would pay the card off each month.  Any opinions or advise? 

I know people who do it and pay it off each month so if you are disciplined enough to do it, go for it and earn the extras. You can always try it for a month or two and if it doesn't work, stop doing it. :) Or you can prepaid your card with the amount of groceries and gas you normally spend a month, for example $400.00 and when it is gone, it's gone and not use the credit. I don't know if you will get rebates that way though. Sometime you have to check into.

Just like any other frugal thing, there are those on both ends of it and in the middle. I too find the incentives appealing but I loathe the risk that is always there with having one.

My husband does use one to put his expenses on as it does make it easier on us to handle finances this way. We do pay it off every month and that does give us a credit boost without the additional interest. But I do worry about what if something happens and we for some reason don't make the payment to pay it off.

 

 

Pat,  We are also disciplined and paid off the "awards" card (almost) every month when we had it.  Yes, that was past tense.  I finally got off that merry-go-round and I don't recommend it to you either. 

 Here's what happens.  You use the card for all your purchases in September.  No problem.  In October, the bill comes in.  Your October income HAS to go to pay that bill off.  You have no "wiggle-room" and no extra money so now you HAVE to use the credit card to buy all your October goods.  We also found that we spent more money than we planned (since it was future money anyhow) and when a true emergency came up that we needed to use the credit card for, we could no longer pay it off the next month.  We also had no way to stop this cycle.  We get paid once a month, so budgeting is crucial and we have to have a plan that will last the whole month.  Now that we don't do this, if I have the car tags to pay for this month, I can still pay the larger electric bill and also have enough for groceries - but I have the options open now to use the income as I wish - reallocating categories as I need to - and it's not tied up and paying for last month's purchases.

 I just really did not like this plan.  I will say that we do have a Walmart Discover card that is used (almost) exclusively for gas.  I pay off the new balance of that each month - but the rewards we earn are not the point.  Getting the 3 cents a gallon off the gas price is.

 HTH,

Deana

When we started this for my husband, we had the funds in the account to pay what he put on the card. I pay the amount weekly with money I have. Next month's money pays for what is spent weeks later not what is spent this week.

 

If you are disciplined it can work for you. When I worked retail there was a customer who used to come in and shop and chat with me when things were quiet. She always paid with her credit card that earned her sky miles. I noticed one day that she paid with a credit card but subtracted the amount spent from her check register. Having chatted with her for over a year about her children, grandchildren, and medical problems I asked her what she was doing. She explained to me that she and her husband paid for everything with their credit card, subtracted the money from their check book each time and paid the card off at the end of the month. She knew what her budget was each month and never spent more. By doing this they accrued sky miles to go on vacation and visit their family. For them it worked. I guess you have to ask if you are "that" disciplined.

Deana,

This is one of the reasons Dave Ramsey hates credit cards.  they are like a trap.  You run it up with the intention of paying the whole thing off when the bill comes.  However in the meantime Murphy may decide to pay you a visit so if you don't have an emergency fund in place or cannot cash-flow that expense then the credit card spiral begins.  It's best to avoid them altogether.  That being said I do use mine to buy gas at the pump, to pay if I eat in a restaurant or to buy something on line.  I am not comfortable using a debit card under those circumstances.

Bev

78% of credit card users don't pay them off every month

UNIVERSAL DEFAULT--the credit card issuer can CHANGE the terms, interest rate, due date at ANY TIME and THEY WILL

Dave Ramsey-ism:  If you swim with the sharks you WILL get bit.
 

I 

I've been doing this for the last year or so and it has worked well for me. But I pay my bills online, so when I charge at the grocery store, I immediately go home and send the money to the card company. I don't let myself float a loan on the CC because I know that's how I get into trouble. If you don't have the discipline to pay it off as you charge it, it's not worth it!

I haven't checked the forum for a few days and I was so pleasantly surprised with all the wonderful advise! Thanks everyone for your opinions on this matter.  I had a chance to discuss it with my husband over the weekend, and it is something that he just hates to mess with.  One of his points was to remind me how much money I've saved on groceries (20%) since we went to cash policy.  We do pay many bills online and Cheapskate, your method sounds very wise and safe.  If we do ever try it, I think that is how I would handle it also.  Thanks for all your opinions.  You spelled out your points very clearly and it was helpful!