Over the past six months I have been a man on a mission. I have cut costs, increased income, been frugal (borderline cheap at times), and watched every cent I have spent. I have automated my accounts. I have optimized my accounts to make sure my money was working for me. The last step, and the one thing I kept putting off, was optimizing my credit card.
With so many choices out there, I hesitated to find the exact card I wanted. After all, I was switching to a card for all of my purchases. This card was to allow me the freedom to only carry one card in my wallet and not worry about my credit limit or if it will be accepted everywhere (sorry Amex).
The new card I picked was Schwab’s Invest First Visa card. This card automatically deposits 2% cash back on all of my purchases into my Schwab brokerage account each month. I am all for automating my finances and for investing more, making this card perfect for me. The day I received the card, I activated it. Suddenly, I felt something I had never felt before. There was an extra reason to spend my money. Luckily, my budget and discipline saved me, but that doesn’t mean I have won the war against this credit card, I have merely won the battle. After a week or two, I am finding myself calculating the amount that will be invested on each purchase I have made ($10 on lunch? $0.20 into my brokerage account. Cha-Ching!).
This is going to be a constant struggle for me. Something as small as 2% cash back on my purchases is already enticing me to spend more. And if that small percent can entice me, while I am a man on a mission, it can entice anyone. I have a new respect for people that cut up their cards, because if you are not armed with the focus of spending wisely or with the framework of a budget, I can see people spiraling out of control and rationalizing part of their spending with these types of rewards.
I already love my card, but that doesn’t mean it won’t tempt me to perform actions I don’t want to. If I would recommend a card to someone that may have a weakness for cash back rewards, I would suggest looking into a travel reward card. These cards offer about the same value as a cash back card, however the lack of a true monetary value to a specific set of miles may make you think less about your rewards when you go to spend. However, this is contingent on the amount you travel.
Be careful out there in the war against credit card companies. Those companies come armed to fight for your money.