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The convenience of credit cards cannot be denied.  Carrying checks or cash is becoming less and less common as we move towards becoming a paperless society.   Each day more merchants, from grocery stores to taxi drivers, are embracing the acceptance of credit cards which makes their use for day-to-day expenses even more compelling.  Obviously there is a danger in the widespread use of credit cards because the amount you have available to spend is not as obvious as when you check how much cash you have in your wallet or look at the balance in your check book.  This encourages overspending and can lead to an undesirable amount of debt accumulation.

However, if you are disciplined enough to control your spending and pay the full balance each month, credit cards can be an excellent tool for convenience and for managing your budget.  When you use credit cards instead of cash to pay for your everyday expenses you have automatically documented the expenditure.  If you use personal finance software to manage your finances you can automatically download all your transactions from the credit card provider and have these transactions automatically categorized so that at the end of the month or year you have a full picture of where you are spending your money and how well you are doing against your budget.  For more information on this subject see the article Using Personal Finance Software for Your Success.

But perhaps the absolute best benefit of using credit cards for your day-to-day expenses is that you can turn your credit card into a cash machine.  Credit card companies are eager to have you as a customer and the fierce competition among credit card offerings is creating tremendous opportunities for credit card holders that have a strong credit score and are disciplined enough to pay their entire credit card balance every month.  In fact, if you have a strong credit history, the credit card companies will pay you to use their cards.  That is right, they will pay you cold cash for the privilege of having you as a customer!  The reason you need to have a strong credit score is because the best credit card deals are only available to those that have shown the ability to manage their credit and pay their bills with diligence.  To find out more about how to build a strong credit score, see the article Build Financial Success with a Strong Credit Score.

I can’t emphasize enough that the trick in successfully turning credit cards into cash machines is discipline.  If you spend more than you can afford and fall behind in paying your balance each month, the interest you pay on you outstanding balance will wipe out all the gains from getting cash back from the credit card company.

Let’s take a look at a few excellent choices for those of you that are disciplined spenders:

Cash Back Program from Discover Card®

This card will give you up to 5% cash back on purchases made on travel, home improvement, gas and restaurants.  For everyday purchases you get up to 1% cash back.  You can also shop at top online retailers through ShopDiscover and get 5 to 20% cash back! There is no limit to the amount of cash you can make with the Discover Card® .  There is also no annual fee and they provide 0% APR for the first six months. In addition, you can transfer your balance to the card at 0% APR for the first 12 months.

1% Cash Back from Capital One Cash Rewards

This card will give you unlimited cash at the rate of 1% for every dollar you spend on the card.  There is no minimum spending, no caps and no annual fees.  The money is yours to take any time with no expiration for the life of the account.  In addition, this card will give you a 25% cash bonus at the end of the year!

For example, if you spend $2,500 a month on your Capital One Cash Rewards card, you will get $25 cash back each month.  After a year you will have accumulated $300, on top of which you will receive a 25% bonus or $75.  This represents a cumulative total of $375 extra in your pocket per year for simply doing what you would normally do anyway: spend money on your credit card.

Up to 5% cash back with Blue Cash® from American Express.

This is perhaps the best cash back credit card available for disciplined spenders.  Again, in order to benefit from this card, you must pay your bill in full each month.  One missed payment and all your benefits are gone.  But if you do your part, this card will pay you up to 5% cash back!  This card also has no minimum spending, no caps and no annual fees.  Here is how it works: For the first annual $6,500 that you spend on the card, Blue Cash will pay you 1.0% on everyday spending and 0.5% on everything else.  Everyday spending is money you spend in supermarkets, gas stations and groceries stores.  Once you get past the $6,500 hurdle, that is when the real big benefits come in.  Anything above $6,500 will qualify for 5% cash back for everyday purchases and 1.5% on everything else.

Let’s look at a hypothetical scenario with the Blue Cash card.  Let’s say you spend the following amounts per month:

• General purchases - $1,480
• Gas Station purchases - $200
• Supermarket purchases - $580
• Drugstore purchases - $100

After a year, the Blue Cash card from American Express will pay you $657 back!

There are other credit cards in the market that pay you cash back, but the two above are among the best.  If you are a disciplined spender with an excellent credit score you are in the driver seat to earn cash rewards that you can spend however you want.  If you haven’t already done so, start thinking about what you can do at the end of each year with the extra cash you can earn from your new cash machine.

Independent Thought:

Competition in credit cards market has been intense ever since the leading online banks have started supporting credit card processing services to the customers. Where brands like citi visa card have been around for quite a while and have developed good customer base and trust level, new brands like chase credit cards are not far behind considering that they are comparatively new in the market. Every new entrant seems to have a unique credit card offer bundled in a package with flexibility, increased credit limit and low credit card fee.

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