Credit Cards
Get a cash back credit card. Use it for (approximately) everything.
When given the option to pay with either a credit card or debit card, it is generally a mistake to use a debit card: credit cards are more secure and credit card companies will literally pay you to use them.
Precisely how much they’ll pay you is… complicated. Optimally exploiting credit card rewards is a problem so-varied that it has spawned a community of hobbyist money-launderers dedicated to answering it. They have a great many spreadsheets. Want to spend a weekend (or six) modeling airline miles, travel points, and your grocery spend in Excel? Welcome to the weird world of /r/churning. These are your people. Start with the wiki and this flowchart.
For everyone else, there’s
The simplest route
- Sign up for Citi’s “Double Cash” Card.
- Set it to auto-pay your balance in full every month.
- Pay for every transaction that accepts credit cards with it.
Viola. You’ll save 2% on every dollar of spending you shift to this card.
What’s the catch?
There isn’t one, beside the standard, “if you carry a balance, you’ll pay back your rewards and then some in interest.” The card itself doesn’t have any gotchas to keep track of: no annual fees, no minimum spend, nothing like that. Just use it in place of your debit card and pocket an extra 2%.
(or just pay with cash)
Do credit cards encourage more spending, compared to cash? At least one study suggests the answer is “yes, sometimes.” In it, participants were willing to spend as much as 100% more for items of uncertain value–in this case, sports tickets–when using a credit card than they were when paying with cash.