You're basically leaving money on the table if you're doing most of your transactions on a debit card or in cash in the US. The credit card companies all offer set percentage cash back, rotating categories of higher cash back, and/or heavily discounted miles. Discover and Chase both offer cards with 5% rotating categories that are different between the two and have no yearly fees. Even the cards with a fee often end up being worth it due to the large amount of miles you can rack up with them.
Thats not even getting into the shadier side of card churning for the sign up bonuses or buying gift cards so that you can pay your rent and for other things that have a fee associated with them when you do anything besides a bank transfer.
Not to mention the very common practice of using one card with a very high balance and 0% intro fees to sweep lots of other card balances onto, in order to effectively suspend all your interest for a year.
Indeed. This works even for balances that didn't originate on credit cards - I have a Chase Slate card which has literally never left my house because I only use the account for its 18-month zero-interest offer, which was useful for a small student loan I wanted to pay down quickly.
Many people I know use special card offers similarly. Want those 50,000 airline miles? Better sign up for Delta's Amex, can always cancel after the first year... etc, etc. There are very strong incentives from the card issuers themselves for Americans to carry multiple credit cards, and if you use the cards responsibly you can rack up some serious benefits for no cost.
Your student loans could be paid via credit card without a surcharge? Or is it just that the surcharge was lower than the interest rate and you planned to pay it off in 18 months so it was worthwhile? That's an interesting strategy I haven't seen before.
That's not a fee, that's the interest rate. You would pay 20% over a year of interest. There are many many cards with promotional rates between 0% and 5% per year.
It's the cash advance fee (different from the normal interest rate on the card).
Source: I used it once to get money out like a debit card... without realizing there would be a fee, and got charged the nasty fee. For the card I tried it on at the time, the fee was somewhere between $10–20 on a $100 withdraw. Never tried it again.
Yep, my scenario was exactly like aianus's above. 1% transfer fee was much better than 6% interest since I planned to pay the balance off within the 18-month zero-interest period anyways. The card company issued paper checks specifically for the purpose of a balance transfer.
My bank and college allowed credit card payments, but there was always a percentage fee that was much higher than what you would get back from credit card rewards
Thats not even getting into the shadier side of card churning for the sign up bonuses or buying gift cards so that you can pay your rent and for other things that have a fee associated with them when you do anything besides a bank transfer.
https://www.nerdwallet.com/ has a good primer on the different cards