We talk a lot about using credit cards (specifically cash back credit cards) to MAKE some extra money over the course of a year, but does anyone ever get a credit card because it will SAVE them money? Recently I've gotten two cards just for this purpose and I'm wondering if any of you have as well.
The first card I got was the Gold Delta SkyMiles® Credit Card from American Express. Yes, it came with 30,000 miles, but the real reason I got it is that I fly four or five times a year on Delta (if you live where I do, you don't have much choice.) I am usually gone for three days or so on each trip, so I have a medium-sized bag with me. I also usually have a connection (if you live where I do, you don't have much choice.) I HATE dragging my bag through the airport for seven hours over the course of arriving, flight 1, going to flight 2, flight 2, leaving the airport, and so on. So I check my bag.
As you probably know, Delta charges $25 for one checked bag (each way). So if I travel five times for a total of 10 trips out and back at $25 each, that's a cost of $250 per year. But with the Gold Delta SkyMiles® Credit Card from American Express, the first checked bag is free. So even though the card has an annual fee of $95 (which is waived the first year), it still saves me over $150 per year. Better yet, I can use it for personal travel too. When we went to the Caribbean, we had three checked bags (both ways). Using the card, I saved $150 on this trip alone!
The second card I've already told you about. I got the Chase Sapphire (my first points-based card) even before I knew everyone loved it. I then used the sign-up bonus as a $625 savings to airline tickets I purchased to get us on our cruise. Not bad at all, huh?
Maybe this issue of "saving" with a credit card is limited to travel. I can see where others save on airfare (or related) costs, hotel stays, and the like, but I don't see anyone saving on groceries, eating out, and so on. They can EARN money on groceries, eating out, etc. of course, but they aren't really saving money.
Then again, maybe it's all semantics. Whether you "save" $500 or "earn" $500, you're still $500 ahead, right? That may be the case for the Chase card above, but the Delta card does earn something (30,000 points) PLUS saves money (on the baggage fee), so I think that one is a true savings move.
What's your take on the issue? Have you ever gotten a credit card to save money?
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One of the things that I do with my credit card, since I don't travel, is to pay lots into the credit card and use it to pay the other bills. That way, when I take the money that I'm going to be spending on the power bill and put it into the credit card, I'm paying both of them simultaneously. I'm going to take advantage of the points that I'm getting, too. Thanks for the post! :)
Posted by: Emily Hunter | February 07, 2012 at 05:45 AM
I know you can get some savings on gas with certain credit cards. However, the amount I can save with those cards doesn't equal the amount I can earn by using my Amex Blue Cash for gas.
I guess it somewhat of an example of how some choose frugality while others work on increasing income.
Posted by: Kris @ Everyday Tips | February 07, 2012 at 08:14 AM
I think this is a great example of how to save/earn with credit cards. I still don't think there is an end-all answer, other than having a well rounded 'arsenal' of cards. Blue Cash Preferred for Groceries, Sapphire Preferred for Travel, Ink Bold for my tv/phone/internet monthly bills, etc.
With a well rounded lineup of cards, you'd be hard pressed to find a purchase where you won't earn more than 1% cashback (or equivalent)
Posted by: infamousdx | February 07, 2012 at 08:46 AM
I didn't get the card to save money, but I did open an AmEx last year because of the sign up bonus. However, in the mean time, we've "earned" money with it - AmEx had a few Black Friday deals where we basically got purchases we would have made anyway for free. They also seem to be working with local businesses around here, offering a statement credit when money is spent there - if it's a business we were going to visit anyway (like getting $5 back on pizza last weekend) then it's worth it to track those offers.
Posted by: Claire | February 07, 2012 at 11:26 AM
What about just plain saving cash. I did this by transferring balances from high interest cards to a lower or no interest card. The savings here depends on how much you transfer and the length of time it takes to pay the balance off. I was actually able to make a dent in my debt with each payment because I wasn't paying the high fees I was with some of my other cards.
Posted by: CCC | February 07, 2012 at 11:31 AM
@ CCC If you're having to make payments on interest on your credit card then you are not really saving money.
Posted by: Luis | February 07, 2012 at 01:22 PM
@Claire - I have an Amex Blue Cash. Where do you see these deals for local businesses? On the Amex website or e-mails?
Posted by: Jclimber | February 07, 2012 at 05:23 PM
I have an Amex Blue Rewards. We've turned in our rewards points a number of times over the years for gift certificates that we would use for things like furniture (Pottery Barn) or tools (Home Depot).
Posted by: Glen Craig | February 07, 2012 at 09:14 PM