John Clarke, of Arroyo Grande, California, is a credit card cowboy. He and his wife Karan have three different rewards cards, with each one pegged to a different closing date, 10 days apart. He uses each card for 10 days, beginning on the day after its billing period closes. That means that he gets roughly 50 days of free float before he has to pay any bill, and he gets at least $1 of cash (and often more) thrown back at him in rewards for each $100 he spends. "It's like a business," he says. "Why in the hell would I want to pay cash for anything?" Clarke is one of the few who make the credit card game pay off for them. They never pay interest. They rarely pay annual fees, and then, only small ones. They collect hundreds, if not thousands, of dollars of rewards every year. And they spend most of every month living off of OPM: other people's money.
That's getting easier to do again, as credit card issuers have returned to aggressive marketing and focused more than ever before on the good credit score toting top of the market.
US consumers received approximately 1.2 billion direct mail offers for new credit cards in the third quarter of 2010, a sharp increase from the 391 million received in Q3 2009, according to data from Mintel Comperemedia. Roughly 84 percent of those offers were aimed at folks with FICO credit scores topping 700, reported research firm Synovate. And 41 percent of those rewards (as compared to 28 percent a year ago) were cash-back rewards programs.
"They aren't scaling back any more, they are getting more aggressive," observed Curtis Arnold, publisher of the card-comparison website, CardRatings.com. That provides new opportunities for the Clarkes of the credit card world. They tend to always be in the market for new card offers, and they have little loyalty to one card when another presents a better deal.
Winning card users do tend to concentrate on the same handful of cards that come up over and over again in conversations about generous rewards programs. Here's a look at some of those most popular and highly rated rewards cards and the people who are really squeezing them for all they are worth.
The Fidelity Investment Rewards American Express Co. Card
Investors like Los Angeles photographer and video artist Robert Nock are building portfolios with this card. It pays 2 percent back on all purchases, delivered directly into a Fidelity investment account. (A similar card links to Fidelity 529 plans.) There's no cap on rewards for the year and no annual fee. "A flat 2 percent back is pretty spectacular," says Curtis, who calls the card "the best of breed."
Nock, a graduate student, puts his whole tuition bill on the card, as well as his photography equipment and other everyday charges. As a result, he's charging between $25,000 and $50,000 a year, an amount approximating his annual income.
If he's charging $4,000 a month, He'll earn $960 a year in cash rewards, which he'll send to his Roth IRA and brokerage accounts. If he does that every year, and earns 7 percent annually on his invested rewards, he'll build a $13,574 balance in 10 years.
Blue Cash from American Express
Big spenders can do very well with this program, which has no annual limits. They earn 1 percent cash back on every day purchases, such as gasoline, groceries and drug store items, and 0.5 percent back on everything else, until they spend $6,500 in a year. Then their rewards get supercharged: they earn 5 percent back on everyday purchases, and 1.25 percent back on everything else.
The blue cash Amex is actually Arnold's favorite card. "With six kids plus an exchange student, we charge more than the average family," he said. "But we're getting well over $1,000 in rewards this year."
Small business plays a vital role in today’s economy. It is now easier than ever to establish a new business. According to the US Small Business Administration, small businesses pay over 45% of the US private payroll. Small businesses also employ over half of all private sector employees and provide 60-80 percent of new jobs over the past 10 years. With about 28.5 million small businesses in the US alone in 2005, virtually all financial institutions now offer small business loans to qualifiers for a percentage. So why apply for a small business credit card?
Keep Track of All Your Small Business Expenses
The first and most obvious reason for a small business credit card is to separate personal finances from business related purchases. With your small business credit card, you can make all your transactions by phone, internet or in person. Then get periodic statements detailing all of your business expenses.
Business credit cards are accepted virtually everywhere that you shop. Covering business purchases with employee’s personal money can get very messy. So instead of relying on cash, use a business credit card. Most credit card issuers offer a credit limit for employee cards as well as different methods to monitor how the card is used.
You no longer have to dread the year-end nightmare of trying to track where and when you spent your money. It’s like having all your book-keeping done automatically for you! In a digital world, why should your business have to collect every last printed receipt?
Establish Your Small Business
A credit card with your business name on it gives your business credibility. A business credit card looks a lot more professional than paying from your own wallet. It also gains the respect of financial institutions. Just by owning a business credit card, your business can build credit. So when you need that business loan, you will get the best interest rate and qualify for higher amounts. As your credit builds you might also qualify for a lower interest business credit card.
So even if your business doesn’t have a 6 figure budget, a business credit card could help your business grow. You never know when your business might suddenly need extra money. Office equipment might need immediate replacement. Without a business credit card, financing could drastically interfere with your daily routine.
Earn Rewards with a Business Credit Card
You can also save money and earn rewards. Certain business credit cards give you cash back on all your purchases. Other cards give you varying cash back percentages depending on where you shop…gas stations, grocery stores, office supply stores, etc. A cash back business credit card is a great way to increase your profit margin.
Other cards give you airline travel rewards just for using your credit card. For instance, if your company has frequent business plane trips, then small business credit cards that offer travel miles, hotel accommodations or travel insurance are most suitable. This type of credit card could give you travel discounts, free flights, free companion travel or upgraded flight seating. Not only does a small business credit card provide convenience and rewards, it also helps to build business credit for the future of your company as you watch it grow! Research the business credit cards available and find the card that best suits your business needs. Finance your business for today and tomorrow.