Recently, I had a conversation with a family member who has been married only a short time. As with any relationship, each person brings a set of positive and negative qualities, but both are generally willing to look past the negative for the positive qualities. Given the nature of my work, we naturally talked about finances and how ways to handle them are about as different as people are, whether good or bad. Although I didn’t impart any sort of revelatory advice to my family member, our conversation did cause me to think about how someone could earn more of our most popular credit card categories – the cash back reward credit card.
My train of thought after our conversation led me to devise a strategy that anyone should be able to do without much work. This strategy probably could not have worked even a decade ago, but with the utilization of the internet and online banking, you can now earn even more cash back. All you need is a cash back credit card, a high-yield savings or money market account and a checking account. Your cash back card can be that of your preference from whichever issuer or bank you prefer. For convenience, find a bank, financial institution or credit union that pays the most you can find on a savings or money market account and open an account there. You’ll also want to open a checking account with them too so that funds can easily be transferred if necessary.
The cash back credit card is probably the most universal reward credit card because of its broad appeal to earn the cardholder cash back on every purchase they make. If you do not already have a cash back credit card or are looking for a different card, there are a few points to consider. First, take into account where you would make the majority of your purchases. Is most of or a large part of your money spent at grocery stores or at gas stations? Do those places only accept Visa and MasterCard or do they accept all issuers? Having two cards from different issuers, like a Visa and an American Express, is certainly very common. Next, is knowing how much you charge each month or year on the credit card. Depending on how much you charge can determine how well you maximize your cash back reward. Many of the higher percentage cash back cards have tiers that earn different percentages of cash back based on the amount you spend. Some people may be better served by a 1% cash back reward versus a card that can earn more on a tiered basis. Maximizing your reward with some forward thinking and making every purchase you may normal make with conventional payment methods can add up to a healthy cash back reward.
Most people probably already have automatic withdrawal setup to pay bills that cannot be made on a cash back credit card. Why not have those same bills deducted from a high-yield savings or money market account instead? Plus, a savings account and in some cases a money market account, provide debit cards to account holders for convenience. This gives you the ability to withdraw cash at an ATM or use a debit card as you normally would. Deposit or have your paycheck direct-deposited into this account so you can earn interest on it instead of that “no fee” checking account that pays no interest.
However, having a checking account is simply a necessary evil, but having it with the same institution will make money transfers quick and easy when you need to actually use the services of a checking account. You may or may not be able to eliminate a checking account completely, but in the event you actually need to write a check to someone, you can. You just make out the check as normal and transfer only the necessary amount from your savings or money market account to cover it.
There are many different institutions that can help you get the accounts necessary to implement this simple strategy. Use a comparison website like Bankrate.com to find those who offer the highest paying savings or money market accounts. Also, be sure to check with your local credit union and even your current institution to see what they offer. Once your accounts are established, you’ll be on your way to earning even more cash back.
