How to Play the Credit Card Game and Beat the System

The feeling on credit cards vary widely and if you talk to 5 different people about credit cards, you’re likely to get 5 different answers on whether or not they’re good to use.

Despite being a Dave Ramsey-trained budgeting coach and a self-proclaimed frugal minded fellow, I’ve opened up to the reality that credit cards can be a good tool if they’re used wisely.

In fact, in the past 2 months alone I’ve been able to rack up over $600 in free money from credit card rewards! Personally, we’re going to get CASH back and use the money to buy a new washer and dryer (thanks Chase). How you use the money is up to you, but if you’re able to play the credit card game as effectively as we have, then I’d say that’s a good problem to have to figure out.

Credit card game image

How to Play the Credit Card Game

Beating the credit card system and outplaying them at their own game is fairly exciting. It’s not complicated, but it does take a little research and discipline:

Step 1: Find the Best Card

The most important step to playing the credit card game is making sure you have a good weapon in your arsenal. The reality is that there are a lot of worthless cards out there, however, there are also some that pay amazing rewards!

With the internet at your fingertips, there are tons of great sites that allow you to compare credit cards and find one that will help you take advantage of the system. For instance, comparing credit cards at Totally Money gives you a category to sort cards from balance transfers, to rewards and cash back, to purchases.

Here’s what to look for:

  • No annual fees – if there is an annual fee (like the one I just signed up for) make sure it’s waived for the first year and then cancel it before your anniversary!
  • High incentives – the Chase Sapphire card is currently offering $400 in rewards if you’re able to spend $3,000 within the first 3 months. For some this is possible, for others it may not be. Look for incentives such as these when playing the credit card game.
  • High Cash Back Percentages – the Chase Freedom card is the one I’m loving right now for cash back. Each quarter they’re giving back 5% on particular categories; for these past three months it’s been on gas and restaurant purchases! So, we’re you’re looking to play the game, make sure you’re at least getting 1 or 2% back, and if you can find something offering more then go for it! Just make sure there is no annual fee.

Step 2: Pay off the Balance Each Month

When playing the credit card game, the ONLY way for you to win and beat the system is to make sure you’re not paying interest. If you pay interest then you lose; do not pass go and do not collect your $200.

Step 3: Don’t Spend More Than You Would Have Otherwise

When playing the credit card game, this is where most people fall short and hurt themselves. As some like to say, “when you play with fire, you’re bound to get burned.” People that pay with credit cards spend about 16-18% more than people paying with cash.

Playing the credit card game and winning at the game are two totally different things. If you want to win, make sure you’re spending within your budget and not buying more than you would have if you’d paid in cash.

Step 4: Use Your Rewards

I haven’t looked at the statistics in a long time, but the reality is that most people never use their airline miles or rewards points! What’s the purpose of playing the credit card game if you’re not even going to take advantage of what they’re offering you?

Step 5: Out-Earn the Annual Fee

If you do find a card that’s too good to pass up and it comes with an annual fee, then make sure you’re earning FAR MORE than what they’re charging you. With the Chase Sapphire card that I mentioned above, they waive the first year’s annual fee but at the 2nd year they’re going to try and charge me $95. Well, I’m here to win at this game and I don’t plan on giving any of my rewards back. Therefore, I have my anniversary date marked on 3 different calendars and I’ll be sure to cancel that card well before that date comes due.

Different Ways to Play the Game

Playing the credit card game goes beyond earning points or cash-back opportunities. Here are a few that I’ve thought of:

1. Balance Transfer Credit Cards – Transferring a high-interest rate credit card balance to a 0% APY Balance Transfer Card is a great way to beat the system and play the credit card game! Many of these cards come with a 3% balance transfer fee, but as long as (1) there is no annual fee, (2) the 0% offer lasts for at least 12 or 15 months, and (3) you’re saving a substantial amount on the interest, then there is little doubt you’ll win the game as long as you focus on paying off the card quickly!

2. Department Store Cards – Most department store cards don’t give cash back, but they do give free merchandise and amazing discounts. Here at the WSL house we don’t carry too many department store cards, but there are a few stores we enjoy and we’re taking advantage of their generous offers. 🙂

3. Airline Miles – airline mile cards are a great way to earn free trips throughout the country. While this isn’t currently part of my credit card game, I can see a time where I look more closely at a few of these offers. My dad has frequently used his Southwest card and he earns 4 or 5 free airline tickets each year; maybe he’ll hook me up with one one of these days.

4. Cash Back or Rewards Points – this is the most common credit card game that people play and it’s an easy way to earn 1, 2, or 3% back on many of your purchases. While I’m not a big fan of 1% cards (as I’d just rather use my PerkStreet debit card), I look at every card that’s willing to pay at least 2%.

Readers: do you look at rewards points and credit card offers as playing a game? I think it’s kind of fun and I’ve been dominating the credit card game. How successful have you been lately? Recently over at Budgets are Sexy, one blogger just talked about how he earned $4,000 cash back playing (and winning) the game!

About the Author

By , on Oct 1, 2012
Andy Tenton
Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the publisher of WorkSaveLive.com.

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{51 Comments}

  1. Shilpan says:

    I think the reason Dave Ramsey suggests to avoid using credit card is due to human tendency not to exert discipline to control impulse spending with a plastic in his/her pocket. For those who can develop discipline to pay in full every month, credit cards provide best of both world — a great credit score and fringe monetary benefits.

    • Andy says:

      I would agree for the most part that that’s Dave’s stance, but he also just dislikes credit card companies to a great extent. They do have some very shady practices and take advantage of many people…but in my opinion it’s a two way street: people also allow credit card companies to take advantage of them.

  2. Great tips! I also enjoy receiving maximum rewards and discounts from my credit cards. I use reward points to go on a 2 week European vacation. Capital One Venture Card baby 🙂

    • Andy says:

      Big thanks for stopping by Dominique! It looks like the Cap One Venture card offers 2% rewards basically; just in airline miles instead of cash back, right?

      2% on EVERYTHING is a really big plus and a European vacation sounds pretty amazing. Way to play (and win) at the credit card game!

  3. MomofTwoPreciousGirls says:

    I’m way too much of a spender to try this game! However, I definitely see the appeal for those that are more responsible than I! Maybe someday…

    However, I do use my Perkstreet card for everything and in a year earned $500 cash back, at the base %. The best reason I earn so much, though is daycare allows us to pay with it…so even if i spend on nothing else I earn about $14/month (which of course I spend more than that). I’m satisfied by that and able to remain in control!

    • Andy says:

      Wow…that’s awesome daycare accepts credit cards and allows you to rack up the cash-back! I love my PerkStreet card but when they did away with the standard 2% (for all account holders with $5,000+) it really turned me off and that’s when I started looking into the credit card game.

      • MomofTwoPreciousGirls says:

        Yeah, I was sad they made that change because it was a goal I was trying to attain…but I like getting some rewards for paying my normal bills without risking overspending!

  4. Andy, nice post on how to effectively play the credit card game and get ahead. I also play the game and primarily use the rewards for airline tickets when I visit my parents in Arizona. Although, I have a rewards card that allows me to use the points for cash back as well, so it is a nice deal all around. (US Bank Flex Rewards)

  5. CreditDonkey says:

    The key word is “wisely”. Totally agree with you there that a credit card is a good tool when used wisely. My friend has five different cards used for five different reasons. There’ s one for air miles, cash back, college student deals, small business deals and balance transfer deals. So far, he has no complaint aired. But I know he had a good deal of research done before he used the cards.

    • Andy says:

      There is a new program I read about a few months ago (can’t remember which blog), but instead of carrying all the cards around with you, you just register all of your CCs with this card and swipe it whenever you’re out. That new card then determines which of your cc’s fits best and offers the most rewards at that store and then charges it to the proper card.

      Wow…that sounds confusing. Basically the card with this program is NOT a credit card, it’s simply a card that you can link all of your credit cards to and it does the work for you (ie. figuring out which card gives 5% cash back at the gas station this month).

  6. I’m all about getting the best rewards credit card and spend everything I can using it! Free money!

  7. Andy Hough says:

    I’ve gotten quite a bit back in rewards this year considering I haven’t spent that much. Back when you could get a decent interest rate on your savings account and 0% balance transfer with no fees I used to do credit card arbitrage too.

    • Andy says:

      Yeah, you could have really played the credit card game and beaten the system awhile back. I was hoping that my debit card would allow me to pay my credit card with it (therefore earning an extra point), but unfortunately that wasn’t the case.

  8. Adam Hathaway says:

    I agree with this philosophy if you are disciplined enough to do so. I too decided to hang onto my credit cards but I set up monthly full balance payments. I only make purchases on the card that I would make with check or debit anyway and my budget has granularity enough to point out if I am straying. So again, I agree with this method but only for those that are disciplined.

    • Andy says:

      Adam, I’m with you: the credit card game certainly isn’t for everyone. There are many that try to beat the system and end up having it backfire. It’s a challenging game and that’s one of the reasons credit cards are able to offer the incredible rewards that they do.

  9. (in the Ghost-busters theme song …) I ain’t afraid of no credit cards!

    I totally agree with this strategy Andy (except for paying annual fees – I really try to avoid that). I’ve been playing the credit card rewards game for years, and can assure anyone that it is a game you can win. I’ve never paid any interest or fees. I just set the automatic payment and make sure my bank account is ready to handle it. All I have to worry about from there is maxing out the rewards. I’m on course for over $1000 in rewards this year!

    • Andy says:

      I just looked at my balance this afternoon and I’m almost near $700 in rewards in only 2 months! It’s a fun game to play…as long as you win!

  10. Peggy says:

    I agree with you about using credit cards to your advantage and have been doing so for years. One thing you didn’t mention, though: Opening and/or closing a number of cards in a short amount of time could have a negative impact on your credit score. Longevity (among other things) is key to building credit. Just something to keep in mind.

    • Andy says:

      Peggy, I do appreciate you bringing that up. I actually wrote a post a month or so ago about “does canceling a credit card hurt your credit?” which discussed this exact thing. I’m not too concerned with hurting my credit as we don’t borrow money very often, but yes, opening and canceling credit cards continuously is probably not a good idea.

  11. Hank says:

    Step number 4 blows me away. People never use their rewards? That’s crazy! My wife and I use our rewards to buy Christmas gifts for our friends and family every year.

    • Andy says:

      I don’t know how or why people wouldn’t use them, but my guess is that they just don’t rack up enough to make it worth while to them. The biggest place I’ve seen it be an issue is with airline miles and rewards. But there is really no reason anybody shouldn’t cash them in especially if they offer true cash back.

  12. Pauline says:

    I have heard many stories about people racking up miles and flying for free most of the time, that is awesome! Here i Europe credit card rewards aren’t that good. I have one with no ATM fees abroad, which is a big reward for me, as I travel a lot. I guess you have to chose the best credit card for you in order to win the credit card game.

    • Andy says:

      Pauline, choosing the best credit card is definitely one of the most important steps. I haven’t done much research but I’d really like to know the differences in credit cards offered here in the states versus European ones.

  13. I’m all about this. I used to be from the “credit cards are evil” camp, and still see the temptation of overspending, but you truly can win at this game. Also, the credit score boost is great if you are looking to buy a home soon as well.

    We do airline miles, and are flying free to Florida next month. Saving us about $750, easliy, plus we still have miles left over to do a quick trip to California next year. Woohoo! I love FREE!

    • Andy says:

      Wow, that’s really impressive! How long have you been playing the credit card game and which card are you using (if you don’t mind me asking)?

  14. I am about to start playing the credit card game-put all my expenses on the card and paying it off each month. Hopefully this help keep my budget in line even more. Wheeee!

  15. CF says:

    We have a card for earning movies and another card that earns miles. I keep meaning to sign up for a cash-back card and using it for groceries and bills, but haven’t gotten around to it yet!

    • Andy says:

      Yeah, I’ve used the Freedom card exclusively for gas and restaurants this past quarter and I made quite a bit of money. Furthermore, today I was rewarded with 10,000 points (or $100) for nothing. I didn’t even know that was an incentive for that particular card.

  16. I don’t really use cash any more unless I have to as the credit card is so much easier. I tend to use my Canadian Tire CC as I buy quite a bit from the shop so it comes in handy all the free money. I pay my bill every month and have never paid interest on any purchases. Where it gets out of hand is when people charge it and forget it…. it doesn’t work that way and no savings are to be had when you pay interest. Cheers Mr.CBB

    • Andy says:

      Yeah, forgetting it is a sure-fire way to lose the game. It’s so important to not spend beyond what you planned on anyhow and be sure to pay it off before the interest gets credited.

  17. I definitely use credit cardsbto my advantage. I have never paid even a penny in interest or fees and have made over $1,000 from them this year alone!

    • Andy says:

      I remember reading your post a few months back with how much you earned; I think it was around $450 at that time so you’re doing a pretty good job of making the free money!

  18. I feel like I’m too lazy for this game. I have a really low interest rate on my credit card, and I’ve stuck to it for years.

    • Andy says:

      I was that way for awhile but with how much I spend on my business, I just couldn’t continue to pass it up (especially with the Sapphire card offering $400 for free).

  19. Modest Money says:

    I definitely play the credit card game and come out on top. I’ve got in the habit of putting all payments on my credit card even if it’s a $5 lunch. That way I am earning cash back on all my purchases. I consider it my personal VIP card to get discounts everywhere. I’m always reminded that I’d be paying more if I used cash.

    • Andy says:

      I don’t think we’ll ever get away from using cash for the majority of our monthly purchasing (groceries, eating out, etc), but I understand when people do. It may simply be a matter of time, but I like our system as we have it now even though we’re passing up some free money.

      • Modest Money says:

        I think groceries in particular is one that you should start using your credit card for. Many cards offer up to 5% back at grocery stores. I’m sure you could somehow make that work while still using your cash budget for other expenses.

        • Andy says:

          I’ve contemplated it but in the short time that I’ve had the Freedom card they haven’t had a grocery category yet on their 5% rewards. On top of that we’ve been supporting a local student/family who gets some money off of their tuition for every gift card we buy through them to our local grocery store. So, we write them a check for $200 each month and get $200 in gift cards. If we ever stop doing that then we’ll probably implement grocery shopping into our credit card game too.

  20. I considered getting the Sapphire card for our rental renovations, but the painter and electrician don’t take credit cards, so I don’t think we could have hit the $3000 mark. If we need somthing big that we can pay for with credit, we’ll do that one. Also, everytime I’ve tried to cancel a card because of the annual fees, they have waived it. I’d ask. If you are a good customer, they’d be stupid to let you cancel over an $80 fee.

    • Andy says:

      I agree and I do plan on asking them to waive the 2nd year’s fee. We’ll see though…if they’re unwilling then I’ll be happy to walk. No chance I’m losing at the credit card game! 🙂

    • MomofTwoPreciousGirls says:

      For them to waive it you must be a profitable customer. Their computer system, will quickly run through your spending to see if it is worth their while. If you are not paying interest AND gathering tons of rewards, the swipe fees on your purchases are the only way they are making money…with the Frank-Dodd act those swipe fees were severely limited. That’s why annual fees started coming back these last couple of years. If you are spending a lot it still may make sense for them. You just can’t rely on that when thinking through your choices…

      If you call and they agree ensure you keep track of who you spoke with and the date and time. Then verify on your statement that you were not charged. I started my career in credit card customer service and often you would have customers call saying they spoke to someone and the notes were there that rep ran the waiver request through and had it approved, but they forget to enter it!

      • Andy says:

        On those tricky credit card companies. I’m sure they get away with that kind of stuff all of the time, so it’s a great idea to get the rep’s information and date/time you spoke. Thanks for the tip!

        • Matt says:

          I used to work for Barclaycard and we were told to always refund the fee if the customer rang up and asked regardless of whether they were a customer like you or not.
          Don’t forget, that even if you don’t pay them interest, they still make a LOT of money from your card as the retailer pays them a small percentage of the purchse price everytime you use it.

  21. Jonathan says:

    I’m in the same boat as John, I know you can game the system as long as you pay the balance in full every month. I just have an irrational (ok, it is a rational, I just don’t feel like explaining myself) hatred for the system of debt bondage perpetuated by the ignorant abuse of credit cards.

    • Andy says:

      Jonathan, I do agree but if I held a grudge against every industry I felt wasn’t morally correct or hurt people in some manner, then I’m afraid there wouldn’t be any places to buy things from.

  22. I love credit card rewards. Just never pay interest and you are guaranteed to win! Muaahahhahhh!

  23. Awesome on the $600! I’ve not played the credit card game. I know, if done right, it can be quite a way to make free money. I don’t know if I have the stomach to try it though. I know it would not tempt me to spend more, I’d just be afraid that I’d forget to cancel a card or something like that.

    • Andy says:

      I definitely understand as I avoided the credit card game for 6 years while we were getting out of debt and I was learning to control my spending. However, the rewards just became so much that I couldn’t overlook it. $1,000/year in free money is really difficult to turn away from; especially if you find a card that doesn’t have an annual fee such as the Freedom card.

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