In an effort to improve my finances, I've shifted from using credit cards with rewards to cash back debit cards and leveraging various reward apps. Unlike credit cards that often provide points or miles which convert to store credits that can be redeemed for flights and hotel stays, debit cards present a more immediate form of cash back, providing a subtle yet impactful financial boost.
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One example is the HEB debit card which offers an impressive 5% cash back on HEB branded products. This quickly adds up during routine grocery runs. Groceries are easily a large expense for any family. If we were to spend, for example, $800 a month on groceries, that would yield about $40 in cash back rewards. For us, that's about what I would spend on ingredients for two meals for my family.
The PayPal debit card is significant for my fuel expenses as it enables 5% cash back on fuel purchases, yielding substantial savings – particularly helpful for my work as an Uber and Lyft driver. This, coupled with the 7-Eleven app, which grants me an extra 5 cents discount per gallon, further enhancing these savings.
Additionally, the Crypto.com debit card provides a 2% cash back reward in CRO coin, with potential for more if I choose to stake more coins to upgrade my card to a higher tier. The Crypto.com debit card does have some spending categories for which it does not pay CRO rewards, such as utilities and taxes. This is why I use it mainly for small day to day purchases. This rewards from this card, however, have a different place in my finances. To avoid triggering taxes by selling the CRO coin rewards, I transfer the rewards to Tectonic.finance as collateral for loans. This way I can borrow USDC at low interest rates, which is not taxable. Of course, I need to pay back the loans. But there is less urgency than there would be on a credit card.
For other spending that isn't covered by the previously mentioned debit cards, the Fold debit card and Coinbase debit card offer 0.5% cash back paid in BTC. This isn't much. But I'd get nothing at all if I used my bank debit card.
Aside from debit cards, I've engaged with apps like Lolli and Fold, which allow daily earning of satoshis (SATS) with minimal effort. With a gamified experience, these apps are an enjoyable earning opportunity. I'm not going to get rich on the rewards. But I can start my day with winning something. The 7-Eleven app also offers games, discounts, and occasional free items.
There is a place for credit cards, however. If I ever needed to rent a car, debit cards are not accepted. And credit cards offer such things as purchase protection and fraud protection. They are good for travel as a buffer to the money in your bank. So, I won't completely do away with credit cards. But I definitely won't use them as much.
The culmination of these efforts contributes, albeit slowly, to financial resilience, cushioning against inflation and ensuring that every cent is maximized. I do want to reiterate that none of this will make me wealthy. You don't make money by spending it on living expenses. All I am doing is mitigating some of the cost of inflation. Obviously, as prices go up, spending goes up, and the rewards go up. If only my income would also go up.
One additional factor to all of this is putting the majority of my income into Bitcoin for spending. If I can get a percent or two for a few days of hodling, it adds up over a year. Again, these gains are marginal. But they aren't insignificant over time.
I should clarify that I have Bitcoin for spending, and Bitcoin for accumulating. The former is bought and sold as needed in one account where taxes are easy to do. The latter is part of the crypto pool where I also deposit CRO rewards as loan collateral. I suppose being smart about taxes is also a marginal way to improve my finances.
Debit cards with cash back rewards are relatively new to my world. Historically, there hasn't been enough meat on the bone for banks to offer any rewards on their debit cards. Obviously, the companies that do offer cash back rewards on debit cards are subsidizing those rewards with their other business activities using customer deposits. They are a welcome development to the world of personal finance, even if the gains are marginal.