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How I’m maximizing card rewards for my wedding
My wedding is just one month away. My fiancé and I have been strategizing about how best to accumulate and use credit card rewards to subsidize some of the costs of our wedding and honeymoon.
The average cost of a wedding was over $30,000 in 2014, reports wedding site TheKnot.com. With a smaller guest list (about 50 people compared to the average of 136) and some savvy rewards use, we hope to trim that cost while still creating beautiful memories with our friends and family.
Here are some of our strategies.
- Invitations and guest book. Naturally, I ordered our invitations and guest book online using a discount code and paid for them using a credit card that earns travel rewards (as CreditCards.com points out, paying for wedding expenses with a credit card also gives you purchase protection). But to sweeten the deal even further, I also used a cash-back savings portal. Once we get our wedding photos from our photographer, I plan to order thank you cards using the same strategy.
- Venue. We chose a beautiful venue that could host both the ceremony and the reception, so there’s no transportation costs in between, and they handle all the rentals for things such as tables, chairs and china. We put down a small deposit to reserve our date and the balance is due closer to the wedding. But once I opened a new credit card with a generous points bonus for spending $3,000 in the first three months, I made another deposit towards our balance at the venue. Instead of making lots of little transactions to meeting the spending requirement (or worse, missing out on the bonus altogether), I met it in a single transaction. Since we knew we’d have to pay that money eventually, we figured we might as well time it to get the most rewards and avoid a giant bill the month of the wedding.
- Honeymoon. Our honeymoon in Europe is heavily subsidized by Delta Skymiles and Marriott points. (In case you’re curious, Hack Your Honeymoon shares a pretty sweet around-the-world honeymoon that costs less than $1,000!) Since my fiancé travels frequently for work, he had more than enough Skymiles for a round-trip ticket. I, on the other hand, was a few thousand miles short, so I made up the difference by purchasing things I’d buy anyway through Skymiles Shopping. I also synched up my credit cards with Skymiles Dining so that I earn miles when I pay with those cards at participating restaurants. The miles don’t show up overnight, so I started building them up a few months in advance. Once we arrive, we’ll be paying for things using a rewards card with no foreign transaction fees as much as possible and enjoying how far our dollars can go in Europe. Then we’ll pay off the balance as soon as possible to avoid interest charges.
One strategy we haven’t used (because we plan to use our rewards for future travel) that could be helpful is redeeming points for gift cards to cover wedding costs. For instance, a Nordstrom gift card might cover wedding attire, while a Michaels gift card (paired with a mobile coupon, of course) could buy craft supplies for wedding décor or favors. Getting a little creative is a great way to save money and personalize your wedding!
3 credit rules I still break (and why)
I’ve been writing about using credit cards responsibly for about five years, so one would probably assume that I’m a super debt-free credit user, earning lots of rewards points and maximizing credit products.
One day I hope to be in the position to utilize all of the great expert advice I’ve shared with you in my articles, but I’m not quite there.
In fact, I sometimes break the very rules that my sources have advised readers to follow. The fact is, I’m in the same boat as many of you, dear readers — someone who lived paycheck to paycheck for many years thanks to the high cost of living in my area. Â In addition to being what some might refer to as “house poor,” I’m also guilty of occasionally enjoying things slightly above my means (hey, I’m human, after all).
On the positive side, I do take pride in my pretty high credit score and always pay my bills on time (except for one time). I paid off my student loans years ago and am saving for retirement. It took me years to get to this point, but I can still do better. If only I’d stop breaking these credit rules…
Carrying a balance. I confess. I’m guilty. Although conventional wisdom says it makes sense to use savings (earning barely no interest) to pay off high-interest card debt, I’ve been a rebel in this regard. I’m not super deep in debt (thankfully), and my utilization ratios aren’t too bad, but I’m a few thousand dollars away from a clear credit conscious. The thing is, as a fairly new full-time freelancer, I like knowing that I have a few months of living expenses socked away as a cushion just in case I hit a dry spell. The credit card writer in me knows that I’m foolishly losing money to interest payments, but the paranoid worst-case-scenario mom in me wants to make sure my bills are covered — just in case.
What I’m doing right: I always make sure to pay more than the minimum on my balances, which has helped me cut my debt in half in the last year or so. And whenever I come into a lump sum of money, I make sure to allocate a portion of it toward debt. My article research has also taught me to be more strategic about my payoff plan, so I learned to tackle the account with the highest interest first, and that’s helped me make progress.
Overusing my debit card. I’m not sure why, but the “money burns a hole in my pocket” idea is true for me. Therefore, I tend to rarely carry cash. As a result, I’m a serial swiper, and the debit card is my tool of choice. The problem with this plastic preference is that it’s not really a secure way to pay. Every time I get gas for my car or go to a restaurant and forget to bring cash, I’m probably putting my financial information at risk for fraud. It’s something I only recently realized when I started writing about the topic. Since then, I try to have cash on hand for certain kinds of purchases, but I do slip.
What I’m doing right: I’ve stopped using my debit card for online purchases. It’s a miracle I’ve never had my information stolen when I think of all the websites that used to have my debit card number on file. The silver lining about being a debit shopper is that I keep very close tabs on my bank account balance — probably every day — so that if fraud were to happen, I’d catch it and report it immediately.
Not being a strict budget follower. I know that if I really put my mind to it, I can be debt free by the end of this year. But that would mean giving up things like my gym membership (which I actually use), cutting back on entertainment spending and not taking a summer vacation. Instead, I’ve chosen to follow the “life is too short” mindset in which I splurge on outings with my kids, the occasional concert with girlfriends or an expensive dinner with my husband. It might take me an extra few months to reach my debt-free goal, but the good times I’ve had have been worth every extra penny of interest payments.
What I’m doing right: While I do spend money on experiences that could otherwise be put toward my debt, I’ve evolved into someone who’s no longer a buyer of frivolous things. When it comes to shopping — whether it’s for clothing or groceries — I wait for sales, cut coupons and often make the decision to go without. As such, I can’t remember the last time I had a case of buyer’s remorse, and I can stretch a buck when I need to.
If I’ve learned anything over the past few years, it’s that it is important to have a smart game plan to get your financial house in order. And as long as you’re making progress, it’s not the end of the world if you choose to break a few rules along the way.
How to fight credit card budget woes
It turns out that less than a third of Americans keep a detailed budget, according to Gallup.
Gallup also found last year that if you went to college or have a household income of at least $75,000, you’re a little more likely to keep a budget — a little under two-fifths in those categories said they kept a budget.
So, what is our hang-up about budgeting? Gallup surmises that Americans might not feel the need to budget because they can check their bank account balance at any time via mobile banking, as well as online banking, the most popular mode of banking, according to American Bankers Association. But, budgeting is about more than reviewing your checking account regularly.
If you keep a detailed budget, you can plan for big expenses, such as visiting Aunt Mae over the holidays. Perhaps more important, you can plan for the unexpected, such as the $3,000 in car repairs my husband incurred when he recently went in for “routine maintenance.”
Because I set aside part of my take-home pay for unexpected bills, we have not suffered from any recent, unplanned expenses.
While I have my family on a strict financial diet, there is one thing I struggle with when it comes to keeping a realistic budget — budgeting for credit card bills. I’ve wondered if credit cards are actually a major reason why people do not budget adequately. Do we hide our heads in the sand because we are going over budget every month with our credit cards?
My husband and I pay our card bills off every month, a habit I highly recommend, but I still always struggle with keeping the credit card part of the budget under control. And I have put off itemizing my cards by category on my budget spreadsheet, because I know the news won’t be good. Head in sand, you say? But some people actually use credit cards as a budgeting tool.
Hank Coleman writes on DailyFinance.com that he and his wife have found that charging expenses primarily on a credit card has simplified their budgeting, because there is a paper trail. Coleman suggests that you use a charge card if you are concerned that you’ll go over budget with a traditional credit card — with a traditional card, you can simply pay a minimum payment each month. A charge card requires you to pay in full each month.
But what if you already have credit card debt?
Louise Balle advises on TheNest.com that if you owe on your cards, pay off the card with the highest interest rate first. She suggests that you make up a budget of all your expenses, including your minimum payments on your cards, then subtract that figure from your take-home pay. That sum is what should go toward your credit cards until you pay them off, she says.
Benjamin Chambers writes on Money.StackExchange.com that you can get your bank to send you a text when you reach a certain balance threshold. He actually uses his card for groceries, paying off the bill each month. Benjamin says personal finance is about behavior, rather than knowledge, and if you practice, you can learn to manage the credit card aspect of your budget, and it will become as natural as using cash.
I like the idea of getting alerts on my phone if I go over a certain amount, but the alerts allowed on my favorite card, which is with Bank of America, don’t include that option. I looked at my Capital One, and it does have an option to alert you if your balance goes above a certain amount.
I set up an alert with Capital One; I want to see if I can curb my card spending this way. It will be interesting to see if I can change my behavior, as Benjamin says you can.
How to Protect Yourself from Credit Card Skimming
Before you stick a credit or debit card into a gas-pump slot, an ATM or another unattended reader, it might pay to look for signs of tampering from skimming.
Skimming is the crime of capturing information stored on a magnetic stripe by tampering with the hardware or software of card reading devices, and it can happen in several ways.
It could be a device stuck inside the actual reader; it could be a fake reader installed over the real reader; or a camera set up near the slot to record the information; or someone using wireless technology to intercept signals that some gas stations use to transmit card data from pumps to computers. It could even be a corrupt employee in a bar or restaurant who may use an illegal reader and sell the information to thieves.
The criminals download the information and often encode it to a blank card, which they can then use to pull money from the victim’s account.
NACS, an international trade association for retailers and suppliers, offers one way to help gas stations detect the fraud. NACS has developed a WeCare security label to be used on fuel dispensers near the credit/debit card transaction area. If the label is lifted to insert a skimming device, a “void” message alerts customers and store employees.
But detection relies mostly on consumer awareness and sharp attention. Experts offer these tips to help protect yourself:
- Avoid using ATMs in poorly lit or low-trafficked areas. Experts often recommend choosing an ATM inside a bank over standalone ATMs. Look for new or suspiciously placed cameras and unusual signage.
- Pay inside a gas station where you can deal with a person and sign for the transaction.
- Pay attention to what the card reader and keypad normally look like on the ATMs you use most frequently.
- Don’t use an ATM if the card reader appears to be added on, fits poorly or is loose. Look for glue marks or residue around the reader.
- When entering your PIN, cover the keypad with your other hand to hide information from any cameras. Also, periodically change your PIN.
- Don’t let a store employee walk away with your credit card to swipe it if you can help it.
- Monitor your statements and keep a close eye out for suspicious charges. Through your financial institution, you can also sign up for alerts that will notify you when certain types of transactions occur.
- Report any fraudulent activity to your bank as soon as you discover it. Consumer protections for debit and credit cards vary, but depend largely on when the fraudulent activity is reported.
Not Fixing That Error Can Really Cost You
Did you know that around 70% of all credit reports contain at least one error? In many cases, these errors go unnoticed until the consumer applies for a loan, and in many cases is turned away. This is the same when you apply for a credit card. When evaluating credit card applications, credit card issuers rely deeply on the information presented in credit reports. Not only does it help in the decision to extend you credit, but it is also one of the main factors in the interest rate you will be paying on your purchases. With that said, it should be easy to understand that obtaining and fixing any errors on your credit report and before you apply for a credit card could increase the chance of getting the card of your choice, and getting you a interest rate that you are comfortable with.
If after reviewing your credit reports you have found errors, you should send a separate letter to each credit reporting agency (Equifax, Experian, and TransUnion) in which the error was found. In these letters you must explain in detail the situation and why this is an error. With each letter you must also include a copy of that credit report with the erroneous information highlighted. Any additional paperwork that you have showing why you are disputing (receipts, contract, etc.) is always good when disputing. By law, credit reporting agencies must investigate any errors that are found, and will speak with the creditor that supplied the data which is in dispute. If the creditor admits to the error the reporting agency will remove that error from their report promptly and without damage to your credit rating. If the creditor does not admit to error, then you will need to file a statement detailing your account of the situation, which will be filed in future reports that other creditors receive. Bankrate provides a great form letter for fixing any credit report mistakes.
When it comes to your credit report you must remember that you do not send in the information that comprises your credit history, your creditors do. But, you are accountable for the accuracy of the information contained in each of your credit reports. This is why it is very important to check your credit report regularly and before requesting a loan of any size. If you do find a mistake please remember it is not difficult to get rid of the errors. It is just time-consuming, but well worth it. There may be weeks or months of phone calls and or sending out mail, but the end result could be getting a loan with an interest rate that you can handle.