You all know my story on credit card debt. And I’m sure you know my fight to defeat credit card debt and how I won the credit card debt battle with my post called – Good Bye Credit Card Debt – 347 Days Later. I never had anything against credit cards, except I was irresponsible. And I learned my lesson. I’ve been credit card debt free for over three months now. I was always all for credit cards, they are convenient, reliable, quick and easily accessible. But only if they are used smartly. For the record, my definition of using a credit card smartly is paying off the balance off in full every month. So, only charge as much as you are comfortable paying off, and without hindering your savings.
Despite being in credit card hell and back, I’ve never been the one to chase points, rewards, miles or any other credit card loyalty program for that matter. My only credit card is my RBC Visa. The card has no fancy rewards, it gives me extra warranty, no annual fee and low APR.
I never chased loyalty programs…..until recently.
Yup, I tricked my self by getting suckered into a store credit card. On my recent trip to NYC, I was standing in line at Macy’s flagship store. I arrived to the check out and presented the cashier with $280 worth of shoes and clothing.
What happened next, happened rather quickly.
The cashier said, “If you apply for the Macy’s Star Rewards card today, you’ll get an additional 20% discount on your whole purchase.” I quickly added it up in my head. How could I refuse such an offer? How can that be wrong? I responded by saying, “Sure, let’s make it happen, I can’t say no to savings.”
A whole five minutes later, after presenting my ID and a quick credit check I was approved.
I spent a total of $283.89. For singing up with Macy’s I received $56.78 credit or 20% off my total purchase. In the end after all the debiting and crediting, the total cost of my whole purchase was $227.12. Pretty sweet deal if you ask me. You should have seen the smile on my face when I walked out of the store.Yes I was happy. Please be happy for me too.
I bet now you’re thinking that despite getting 20% off my total purchase, I have still have to pay the $227.12 back when I get the credit card statement in the mail a month later. And you’re probably right in most cases. However, there are exceptions to every rule. However, I don’t get down like that and I surely don’t roll anymore with buy now and pay later.
So, with my new credit card in hand, I walked down to the next level of the store and straight to customer service. The cashier greeted me and I said, “I’d like to pay off my Macy’s credit card.” Next I handed the cashier $227.12 and paid off my newly acquired store credit card. No debt. Excellent savings. One hell of a deal.
Despite that I’m not into chasing rewards, I couldn’t pass up a good deal. I was just responsible with my good deal. I don’t have anything against chasing rewards, points or store credit cards. If that’s your thing, go for it. Even though most of them are attached to a high interest rate. In my case, my newly acquired store credit card is attached to a 24.5% APR. For my situation, I was responsible with my store credit card and you should be too. That’s the only way to make the deal fully beneficial in your favor.
If you’re going to buy now and pay later, there are only two winners – the store you purchased from and the creditor. Make sure you’re defeating both by paying off what you owe immediately.
Keep this in mind as well….
I should be fully honest here. I know that by having extra credit available I could use it at any time for any reason. So, for my own piece of mind and protection I only limited the card to a credit of $400. Even if I decide to go nuts one day and spend a stupid amount of money in the store - I am limited. And that’s good enough for me.
If you’re finding the lure of rewards cards irresistible, be very careful. Please don’t be foolish to get hooked by generous sign-up bonuses or the hunt to accumulate points. Sadly some folks get obsessed with this chase for points, while losing sight of their growing debt. One or two cards mean you can keep track of what’s happening. Carrying multiple credit cards , multiple reward cards, or department store cards with special bonuses, only means you need to find multiple ways to keep track of all of them.
Are you tempted by store credit cards with special bonuses?