Many of us here at TPG love to leverage our favorite credit cards to enhance our travels. From trying out the newest lie-flat product to relaxing in an airport lounge, these products can go a long way in unlocking memorable experiences.
But for many Americans, credit cards represent a tangible way to support their household’s bottom lines — especially in the face of rising costs and the unexpected hurdles that life can throw in their way.
Recently, TPG founder Brian Kelly sat down with three everyday families to help them maximize their wallets — and the conversations demonstrated the true power of making rewards work for you.
Here are some real-world stories that show just what credit cards can unlock for you.
Building financial literacy
One of the most under-the-radar benefits of credit cards is how they can build financial literacy and set your children up for success in the real world. No, this isn’t about giving teens or young adults unfettered access to a big credit limit. Instead, it’s the power of adding them as an authorized user to an existing credit card.
That’s exactly what we recommended to Seungah Jeong for her 14-year-old daughter, Emi. She just started high school and is starting to spend her own money. By becoming an authorized user on her mom’s card, she can start building up a credit history for when she’s ready to go off on her own.
Even better? Some cards allow you to set individual spending limits for your authorized users, so your kids can learn about budgeting in a controlled environment.
Earning rewards where it matters most
Everyone has different needs when it comes to credit cards, and making the most of your everyday spending requires two important items. Put simply, you need to know:
- Where do you spend your money
- How do you want to use your rewards
If you never eat out, a credit card with a bonus on dining purchases won’t do you any good. If you’re a frequent international traveler, you don’t want to swipe a card and incur foreign transaction fees. And if you focus on earning rewards with a single travel provider, you may be missing out on more flexible rewards.
We saw this play out with all the families we met.
Take the Goralczenkos. Parents Andrew and Tracy have quadruplets who are heading off to college, and both were laid off two years ago when the company they worked for suddenly went out of business. They had been collecting rewards on their favorite theme park credit card for years, but in their current situation, that’s not doing much for them.
Instead, they can shift their focus to cash-back rewards, picking up a new card that awards them 3% back on some of their biggest purchases — like gas and groceries.
It was a similar story with Seungah, whose 18-year-old son Oliver was heading off to Greece for college. Our recommendation was to get a new travel rewards card, specifically one that offers flexible rewards and waives foreign transaction fees. That means Oliver won’t be hit with up to 3% in fees every time he swipes the card in Europe.
Finally, there was Renee Lewis-Mance. She and her husband, Chris, are retired, but she’s very into the points game, focusing primarily on a single airline and a single hotel loyalty program. While these programs can be valuable, Renee is missing out on one of the biggest benefits of being retired: flexibility.
That’s why we recommended adding a new transferable rewards card to her wallet. Earning points or miles in one of these programs provides an array of redemption options when she’s planning a trip. She’s not locked into a single airline or hotel chain, which could limit her options.
Grabbing a one-time bonus
Beyond earning with your everyday spending, most popular cards offer one-time bonuses for new applicants (subject to minimum spending requirements). This allows you to take home a big haul of points, miles or cash-back rewards up front while picking up a new card that better fits your spending habits.
This was particularly appealing for the Goralczenkos. The card we recommended came with a $100 welcome bonus, plus 3% back on some major everyday spending categories. That won’t get them a flight to Europe, but in their current situation, cash back is much more appealing.
Chris Mance found himself in a similar boat. He was able to grab a one-time, $200 cash-back bonus on a new card that was also a better fit for where he spends his money each month.
But even more importantly, this new card will help him address the final strategy …
Avoiding using cash
Here at TPG, we like to joke that there’s no “point” to using cash for your everyday purchases — but there’s certainly risk. Carrying around a bunch of cash leaves you vulnerable to theft, and even if you opt to swipe a debit card, you’re generally earning no rewards on those purchases.
That’s the exact situation that Chris Mance found himself in. While his wife (Renee) loves playing the points game, Chris usually pays cash or uses a debit card for his regular trips to Home Depot and the grocery store. However, by shifting those purchases to a cash-back credit card, he can unlock some significant rewards.
Based on our estimates, his grocery purchases alone could turn into $250 in cash back every year.
In addition, since Chris was spending a good chunk of money on home improvement purchases — tools, gardening supplies, plants — we recommended a card that will allow him to customize his rewards by picking a category to earn 6% back in the first year. That alone should net him around $300 in rewards.
The best part? This card had no annual fee.
In both cases, Chris isn’t spending more money than he already planned to spend. He’s just switching to a payment method that rewards him for his existing spending habits.
Bottom line
The world of credit cards features an array of products to meet the needs of virtually every American. Sure, there are options geared toward luxury travelers with a variety of benefits to help elevate their next trip. But many others can be a great fit for everyday pursuits, like shopping at the grocery store or building your child’s credit history.
Ordinary families can easily take advantage of cash-back rewards to support their household bottom lines, and can boost their earnings by carefully analyzing their spending habits to select the best card(s) for their wallets.
And as long as you’re responsibly managing your credit and spending within your means, the only way to lose is by not participating at all.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: thepointsguy.com
