DFW's with cashback cards

Tondella

I've been dfw-ing for over a year now and in the next few months I'll be closing down a couple of credit card accounts, leaving me with three credit card balances, plus, I'm fortunate enough to have a good credit record.

So, my thoughts are now turning towards a cashback credit card which i would use for the food shopping, clothes, and OH's petrol in the first instance.

I was just wondering how many folk out here on the dfw board are paying off their debts and using a cashback card at the same time. I guess there is no reason why we shouldn't be doing both, I suppose I'm worried that I won't be disciplined enough to only spend to budget once i have a credit card and that debts will start to creep up again. My instinct would be to put the money onto the card as soon as i paid something, although i know the money-saving thing to do would be to put the money aside and earn some interest before paying off the total in full at the end of the month.

Just wondered if anyone had any thoughts from a dfw perspective, and whether anyone had found it too difficult to manage.

mjdh1957

I started using a cashback card (Morgan Stanley) towards the end of my indebtedness. I had a plan to pay the rest of the debt off during the year, and worked out that I could start getting them to pay me for a change with no risk. At that stage I only had a loan payment to make, no credit card debts and I had started to save as well.

I was determined not to pay interest so pay it off in full each month. This month is the anniversary of opening the account, and I will recieve £45 cashback (I'm not a big spender). But that's £45 more than I would have had....

Tondella

mjdh1957 wrote:

I started using a cashback card (Morgan Stanley) towards the end of my indebtedness. I had a plan to pay the rest of the debt off during the year, and worked out that I could start getting them to pay me for a change with no risk. At that stage I only had a loan payment to make, no credit card debts and I had started to save as well.

I was determined not to pay interest so pay it off in full each month. This month is the anniversary of opening the account, and I will recieve £45 cashback (I'm not a big spender). But that's £45 more than I would have had....

Thanks for this, morgan stanley was the card i had in mind too. I know it ultimately comes down to how disciplined you are with yourself. I'm normally really good but clothes are such a weakness with me, and yesterday i stretched the budget to buy a dress (it was sale and will see me through three weddings this year, but still it'll be beans on toast till next Friday).

How much of your budget did you put on the credit card? e.g. are there any bills that can be paid by credit card?

mjdh1957

Absolutely, discipline is the key. And it does feel weird having been a DFW for a long time, to start using a credit card for buying groceries and petrol and stuff.

I'm not a big impulse buyer and rarely get tempted to have a blow-out so it was easy for me to stick to my budget. After all, I was spending this money anyway using a debit card, so switching to the cashback card made perfect sense.

Tondella

mjdh1957 wrote:

Absolutely, discipline is the key. And it does feel weird having been a DFW for a long time, to start using a credit card for buying groceries and petrol and stuff.

I'm not a big impulse buyer and rarely get tempted to have a blow-out so it was easy for me to stick to my budget. After all, I was spending this money anyway using a debit card, so switching to the cashback card made perfect sense.

and, if you don't mind more questions, do you put away the money that you are spending on the card into another account, so it is ready and waiting for when the bill arrives, or do you just pay the amount spent on the card, to the card right away?

dudleyboy

Hi, I'm repaying debt and using a cashback credit card at the same time and providing you're disciplined it's well worth doing! In fact, I pay for almost everything on credit card in order to maximise my cashback (groceries, petrol, occasional meal/cinema trip out). The key things to watch out for are:

• Reduce your credit limit to a realistic amount and one that you know you can afford to pay in full each month (e.g. £500 limit)
• Set up a Direct Debit so that the full amount is automatically paid from your current a/c each month (therefore you never accrue interest or increase debt)
• NEVER spend the money in your current/savings account that you've set aside to pay your CC each month

It's a great way of earning extra money for nothing - essentially paying by CC for things you would've bought anyway. Also, because the money sits in your account for longer (as opposed to using cash or debit card), you earn more interest on it.

You certainly won't be able to retire on the money you earn through cashback but even if you earn just £80 in the course of a year (easily done!) then it's extra money come Christmas time. If someone turned up on my doorstep on Christmas Eve each year and gave me £80 for doing nothing I certainly wouldn't turn them away.

So definitely worth doing, but as with all things money related it does require discipline.

mjdh1957

Tondella wrote:

and, if you don't mind more questions, do you put away the money that you are spending on the card into another account, so it is ready and waiting for when the bill arrives, or do you just pay the amount spent on the card, to the card right away?

I have a savings account so there is enough put away to pay if off each month, so I am earning interest on the amount before I pay the credit card.

I don't know if it is possible to pay bills on the card, not looked into that. They come out of my partner's account so I just pay him one amount each month which covers all the bills.

Tondella

Thanks dudley boy (duh - i hadn't thought of setting the credit limit to my budget level - I'm so used to massive credit limits because of all my balance transfer cards!)

and you're absolutely right about the cashback coming in useful for Christmas - the last two years have been funded through ebay sales but there are only so many things left to sell before my flat is entirely empty and I'm going to work in pyjamas!

SunderlandBlackCat

Once I'd got all of my debts onto a 0% card it made sense to start making cashback on my spending.

I'd heard that the Morgan Stanley card was difficult to get if you had a less than perfect credit history & I wasn't happy with the number of places that take Amex so I decided to go for the Egg Money card & got one in December.

I've set up a direct debit to pay the full balance off every month but if you're worried about double spending then Egg Money is ideal because you can also charge it up in advance & they pay you 3% interest on a positive balance.

Another plus is Egg Money Manager which lets you see your other online accounts in one place

Tondella

SunderlandBlackCat wrote:

Once I'd got all of my debts onto a 0% card it made sense to start making cashback on my spending.

I'd heard that the Morgan Stanley card was difficult to get if you had a less than perfect credit history & I wasn't happy with the number of places that take Amex so I decided to go for the Egg Money card & got one in December.

I've set up a direct debit to pay the full balance off every month but if you're worried about double spending then Egg Money is ideal because you can also charge it up in advance & they pay you 3% interest on a positive balance.

Another plus is Egg Money Manager which lets you see your other online accounts in one place

OOh, thanks for the tip on egg money, I wonder if i would qualify as i already have a regular egg card? I signed up to egg money manager for the £10 bonus but wouldn't be without it now - I know it means they can see all your balances but the benefit of logging onto one site and getting a snapshot of all your credit cards is fab!

dinkylou

I also have debts and use a cashback card and have done for a year or so now. I use the conran card (1%) cashback, no limit. I've made £36 in cashback so far this year with no charges.

The others are right, you do have to be disciplined but if you keep a track of your spending anyway using spreadsheets and budgets etc then you kind of stop looking at it as though its a credit card and use it almost as a switch.

If you use it to pay for things that you are buying anyway such as food, petrol etc then it soon mounts up but the key is knowing that it MUST be paid off before the end of the month. Once you have that in your head and stick to your budget then its not that hard.

If you are prone to putting off paying things 'til next month' then don't do it, but if you either set up a dd or be firm that it must be paid off, then it can make you lots of extra money.