I read a stat recently about millennials and rewards cards that I found shocking – almost 1/3 of millennials have never even applied for a credit card.
Some millennials may prefer to pay with cash or debit, but you can get more for your money with rewards cards (assuming you use them responsibly). I use reward cards much more often than cash or debit because they are more lucrative.
Big Annual Rewards
This year I am on track to earn about $750 (not including a $350 sign up bonus from Capital One) in credit card rewards simply by putting virtually all purchases on my rewards cards instead of paying with cash.
Some people have asked how it’s possible to earn over $750 in rewards in one year. The answer is to find the credit card that works best with your spending, and use them to your advantage.
Here’s how I earn rewards:
- 4% cash back on all gas and grocery purchases using the Scotiabank Momentum Visa Infinite
- 2% back (in travel rewards) on everything else using the Capital One Aspire Travel World Mastercard
Any purchase over $20 goes on the card and it’s become a habit to pay for as much as I can using the credit cards. It may not sound like much but it adds up when you pay for virtually all purchases made on a rewards card. This includes everything from smaller buys like coffee to big purchases like annual insurance costs.
By paying with my rewards cards instead of cash I’ll get money back that I wouldn’t otherwise get that I can use to pay for some of my expenses.
I use my Scotiabank Momentum Visa card for all gas and grocery purchases but also for other purchases that qualify, like gift cards. I regularly buy gift cards at a grocery store (like Safeway) so that I can get 4% cash back on even more purchases. Gift cards like Starbucks, Tim Hortons, Best Buy, Rona and Subway are just a few of the options available.
Cards with Annual Fees
I don’t normally use credit cards that have annual fees, so it was a big step for me when I first got one. I did the math to make sure the annual fee was worth it given my current spending.
For example, the Scotiabank Momentum Visa Infinite card has an annual fee of $99. The highest cash back category is gas/grocery at 4%, which means you’d have to spend about $2500 annually on gas/grocery purchases to make it worthwhile. For me, it’s easy to do since I buy my monthly transit passes at grocery stores to qualify for the 4% cash back.
I’m not totally against cards that have annual fees but when considering a card that has a hefty annual fee ($100 and up) you’ll want to make sure it’s worth it given your own current spending. A quick scan of your bank statements for the past 2-3 months can give you a better idea of what your current spending habits are.
Using Credit Cards Responsibly
It wouldn’t make any sense to use reward cards if I carried a balance on any of them since the interest on the balance would quickly cancel out any rewards earned.
I don’t carry a balance from month to month and the balance comes out of my bank account automatically at the end of each billing cycle.
I use one basic rule when it comes to all credit cards – if I don’t have the money to pay for the purchase in my bank account, I don’t buy it. That way I won’t have to worry about paying interest at sky-high rates and can watch my rewards grow instead.
$100 Gift Card Offer
The $100 gift card offer from Rate Supermarket is back. Anyone who signs up for the Scotiabank Momentum Visa Infinite card now can get a $100 gift card (your choice of Amazon, Best Buy, Starbucks or Ultimate Dining Card) and pay no annual fee for the first year, while earning 4% cash back on all gas and grocery purchases.