Cash back and credit cards. Worth it?

Hello there

I have been reading quite some posts here about cash-back credit cards. Are they really worth using them?

I never liked credit cards because since you pay for the current month expenses the next month, I was always confused and ended up spending more than expected. So for me the small amount of cash back was not worth the potential overspending.

At 25th of every month, I pay all bills, rent, etc. leave some money on the account for groceries, usual expenses, plus a bit for extras and move the rest to savings account. Then pay with only debit card. If I overspend, well, then… time to eat less expensive food and have less beers outside. That way I can control it very well.

With credit cards it is very easy to end up paying more.

Are you guys comfortable with using credit cards instead of debit cards?

Fore me, yes. I am putting everything on my Cashback AMEX, getting 1% cashback.

If you’re prone to overspending, it’s probably not for you.

Me, I am thinking long and hard about (before) any discretionary purchase, with the exception of food. On which I am not splurging wildly either.

I’m quite similar - though I am doing it with a credit card. I am paying off my credit card bills just before the 25th each month - at the end of my “fiscal” month, if you will.

Since I am putting (virtually) everything on my credit card, I see the monthly credit card bill as regular "feedback" on my expenses:

  • Do I still have enough money on my current account to pay off my credit card bill? Good.
  • Do I have money left afterwards? Great, I was frugal (or lucky). I transfer the remainder to savings.
  • Do I have wait for the next salary payment on the 25th, to be able to pay it off? Oops, I overspent!
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Thanks a lot. Your strategy makes sense. I wonder why there aren´t cash back debit cards though.

If there are credit cards that do not have any maintenance fees and give you cash back… where is their business? I guess the small fee that take from merchants, but that would apply for both credit and debit. Strange :slight_smile:

PS: Speaking of the mental component:

I rarely check my credit card balance. So that next credit card bill is kind of always “looming” in the dark during the course of the month. That looming obligation keeps me cautious and guarded about spending too much.

If I used my debit card and had a positive credit balance on my current towards the end of my budgeting period, I’d be more inclined to think “Oh, I didn’t spend much so far and have a healthy balance remaining - I might just blow a bit of it on something…”.

Fees. Banks make much more from credit cards than debit cards. That’s not only due to instalment interest but also because…

“Interchange” fees are higher for credit cards than debit cards (and consequently also merchant fees).

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So that next credit card bill is kind of always “looming” in the dark

Hahaha yes… that “looming in the dark” made me laugh. I had bad experiences with that before. Not that it was a complete wreck or anything but still… ended up overspending a lot and blowed up in my face next month.

I used credit card maybe 5 times in 5-6 years. Only debit card or cash, plus reporting at the end of every 2-3 days the expenses so I can track precisely how much money I spent and why

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If you go through that trouble, then you could also track your credit card expenses the same way and look at your finances through your tracking sheet instead of your actual bank account balance. I do that, mental magic trick!

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The only thing is that I don’t like to use CC and wait that the money goes down later; probably just a mental thing :laughing:

I use one, even a paid one. I only recently learned about Amex, but since I already had mine (TCS Mastercard Gold) I’m on the hook for the 100 CHF anyways I’ll see if the I would’ve saved more by going the Amex route and decide then. It’s got a 1% cashback too.

I think it’s worth it. TCS offers a benefits program too (car rentals, some travel sites, some stores,…), so I’ve gotten some deals by purchasing with that card additionally to the normal cashback.

But as it’s always the case: It’s not worth it if you’re overspending! I’ve once spent close to my credit card limit and I pay it off full as soon I get the bill.
If you’re only buying as you’d be buying anyways, I think it’s a great perk. You won’t get rich but I’ve gotten some money back.
And I can safely say, I haven’t overspent or bought stuff because of benefits or cashback. I also never use it outside of Switzerland (even online).

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I think it’s totally worth it, but only under one condition: that you have your finances under control. I use a budgeting tool for that, which keeps my spending under control. If you check your budget before your spending decisions, you’ll never have to wonder if you have enough for your credit card payment again. That tool I use will make sure that you are staying on track with your Credit Card spending and that you will not be overspending. If you stick to the budget, you will always have enough funds to cover the Credit Card balance when the invoice comes.

I’ve been using Cashback Credit Cards for about half a year now and have not paid a single Rappen of interest. On the other hand, I have accumulated almost CHF 300 of cashback. As I have my finances fully under control with my budgeting tool, I use my cashback credit card for all the purchases I can. I mainly use it for groceries (Coop and Migros both accept the AMEX card which gives 1% cashback), but for any other spending as well, like hotel reservations, online purchases, monthly subscriptions (Netflix, Spotify,…), etc.

Note: I’m mentioning “my budgeting tool” and not the real name, as I had posted a nicely written post just a few minutes ago which has been removed as it was wrongly deemed to be an advertisement. I say wrongly because it was not an advert, but I was just mentioning my experience with that great tool which actually has changed my financial habits and allows me to use (cashback) credit cards without creating debt. Anyways, I still wanted to share my views about cashback cards and hope it won’t be “banned” this time. Cheers :slight_smile:

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Let me add one point about the Amex card (maybe worth a splitting of the conversation)

The 1% cashback is yearly, which means you get the cash back only once per year. If you are a big spender, maybe it’s better to use the Visa/Mastercard cashback (monthly) and invest the amount.
I get back 2-3chf monthly with Visa/Mastercard. I can maybe reach 5chf so for me it doesn’t make sense. It probably doesn’t make sense to have Amex at all since I can’t use it sometimes and it “costs” me 5 minutes more to pay the bill… Still thinking about it.

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the cashback cards are comming as a duo. Amex and Mastercard or Visa. Coverage shouldn´t be a problem. But Visa/Mastercard cashback is only 0.2%

https://www.cashback-cards.ch/de/cards

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Why one should care about if it is VISA or Mastercard? They accept both in 99,9% of places, don´t they?

I have a Mastercard with the other offer from swisscard. 0.33%. The Mastercard with the Amex is sitting on a drawer.

I am like you, I hate using a credit card and wait the next month to fulfilled the bill, this is why I don’t have a credit card but a prepaid (neon) and I hope that my bank will switch from maestro to MC Debit Card in a near future.

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I just have the Debit one with CS, under 26 so 0 chf of fees and I use it for everything :slight_smile:

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