How can I use my credit cards to earn rewards, build credits, and pay for expenses? Part 2

Before starting this article series, I want to acknowledge that some people oppose using credit cards and advocate that people use their debit cards or cash instead to pay for their purchases.

Depending on the setting, purchase, and financial need, I use all three, in addition to digital payment options such as Paypal, CashApp, Venmo, etc. However, my preference is to use a credit card.

This is Part 2 of the series. 

Read Part 1: My First Credit Cards here. 

Using Credit Cards to Leverage Expenses 

A few years after I purchased my starter home, I decided to get brand new windows for my house. It was not a cosmetic purchase. Most of the windows needed renovation. However, I went all out with my selection and got the best windows money can buy for a price tag of $12,000. I could have purchased new windows for $3000 to $4000 less. The sales agent sold me on the product and then convinced me to finance the windows, but after getting the first bill in the mail and seeing the cost of my beautiful new windows, I had minor anxiety attacks.

With the interest rate, the additional cost was going to be over $7000 for the five years duration of the loan. I decided to call my credit card company to see if they had any available programs; behold, one had a reward program.

It was a cash advance reward program with two options. A customer could take a cash advance and pay a small percent interest fee (3 to 4%) of the total amount upfront with 0% interest for nine months or have a 1% increase in the interest (4 to 5%) if the customer decides to pay the interest monthly for 12 months. After those grace periods, they would have to pay interest on the remaining balance.

I selected the first option and paid the small fee upfront. Trust me. It was lower than the interest I would have paid for two months with the original lender because it was a daily interest accrued loan—the worst type from my point of view.

The money was deposited directly into my checking account. That same day, I submitted the full payment owed to that lender. I paid off the amount owed on that credit card, including my previous expenses, within 12 months. By the time I got to 9 months, I had paid off 90% of the amount I had taken out, and paying interest on the remaining balance was a breeze. I paid a little over $500 in interest for the $12,000 I borrowed using my credit card.

I learned a few things from that experience:

• There’s always another way to leverage payment for purchases. Always research and don’t take the first option that is offered to you.
• Depending on the type, credit cards can relieve your financial burden if you know how to use them correctly.
• You don’t ever have to pay interest if you pay your monthly payment in full. This was the most valuable lesson I learned. I can use my card for as much as I want up to the limit, and as long as I pay the amount due on the date it is due, there’s no interest.
• For example, knowing when your bill cycle starts and ends, you can plan for big purchase items. If your bill cycle ends on the 10th, purchases that are made on the 11th will be part of the following month’s bill. So, if you used up $5000 of your credits, and that’s what is due for the month if you spend another $5000 on the 11th, your credit is $10,000. The amount you are obligated to pay for the month when your bill cycle ends is just $5000.

Lastly, if you use up all your credit limit in a month and pay the amount back, the credit card company will reach out to inform you they’ve increased your credit limit.

This is a very dangerous strategy if you don’t have the money to pay the card off because you will be stuck paying interest on that total owed amount, and that’s not an experience I can endorse. I know I butchered the explanation.

If you have a credit card, call your lender, and they should be able to explain it to you. Using this technique, I have not paid any interest on any cards I now use for the last four consecutive years.