For the longest time, I resisted having a credit card of any kind. I didn't want to fall into the trap of debt, high interest rates, and irresponsible spending.
However, last year it dawned on me that as much as I hate the credit game, it might be a good idea to have a worthy credit score in the event that I need a new car or want to put a down payment on a house or land. As of January 2016, I had no credit. Not bad credit, just no score due to my lack of loan data.
I finally jumped into the game later that month, and signed up for a credit builder loan through my credit union. For anyone interested in building a credit score, this might be a viable option. I took out a $500 loan, and paid it back over 6 months. Essentially, I paid about $35 in interest in order to gain a positive mark on my credit.
After this, I got a credit card with my bank to continue building credit. This card was fairly basic, and offered no real benefits besides building a credit history.
And that's when I started playing the points game.
I did a bit of research, and found the Chase Freedom card offered 5% back on rotating categories, such as gas, groceries and restaurants. These are purchases I was already making, so hey, why not get a portion of the purchase back, right? It also helped that you receive a $150 bonus for signing up after spending $500. Cool, free and easy money! I'm mature enough to pay my balance back each month, so it has worked out well for me.
I purchase things from Amazon quite frequently, as any living human probably does these days, and saw that they also had a credit card. This card gave me 3% back on all Amazon purchases, and 2% back on things such as restaurants and gas. It also came with a $50 dollar sign up credit.
Then I went further
I signed up for the Chase Freedom Unlimited card. This card gives you 1.5% back on all purchases, which is nice to use for things like utilities, or practically any other purchase that isn't covered under your other rewards card categories. When purchasing crypto, I went with this card as it effectively reduced the transaction fee down by 1.5%. This card also comes with a nice $150 sign up after spending $500.
The Good
My credit is now hovering between 720-750 after using these cards to build a larger credit history. I've gained several hundred dollars in cashback that I normally would have never seen. When you consider that everyone needs to buy things like groceries and gas, it makes sense to receive a bit of that cash back. While the 1-2% you usually receive back is not a lot, it adds up over time.
I pay the water and cable bills for my house with the Chase Unlimited Card. Together, these bills are approximately $110 per month. 1.5% of that is $1.65. Over the course of the year, that amounts to $19.80. Again, not a ton of money, but an extra twenty bucks isn't nothing.
The Bad
Chase has an extensive profile of my purchase history. I'm sure this data is likely being sold to marketers and other companies who will they sell me additional products based on what I've bought. In terms of privacy, using credit cards are certainly lacking.
I'm also doing business with a large financial institution that I absolutely abhor. JP Morgan Chase are deeply involved in many aspects of society and the economy that are morally reprehensible. Yet, if I never pay them a cent in interest (and I haven't), and don't pay them any fees of any kind (also haven't, save a few foreign transaction fees while traveling abroad), I figure I'm the one winning gains from this relationship.
Another downside to rewards programs that needs to be considered is the fact that it can encourage spending due to the desire to accumulate rewards points. Personally, I believe myself to be capable of avoiding this psychological pitfall, as I'm pretty good at not purchasing things on a whim. But if a person is prone to poor spending, obviously rewards credit cards can encourage this bad behavior even more.
If you are to engage in rewards points programs like I have done, be sure to know yourself well enough not to become a victim of the game. Play the game well, and you can end up taking money from the big financial institutions without losing a cent.