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How to Get Lucky With Credit Cards

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Okay, folks, get your minds out of the gutter. This is a St. Patrick’s Day post, for goodness sake. Between servings of corned beef and cabbage, consider this: With a little luck of the Irish and some sound decision-making, you can use your credit cards to end up with more green in your pocket. (OK, no more puns.)

Here Are Four Tips Worth Remembering:

#1: Improve Your Credit Card “Luck”

There’s a saying that goes something like this: Luck is the intersection of preparation and opportunity. This is so very true. You create a lot of your own luck by working hard so you’re ready to take advantage of opportunities when they come your way.

It’s easy to relate this concept to credit cards. If you work hard to maintain an excellent credit history, you’ll qualify for the best offers. People who qualify for credit cards offering $200 sign-up bonuses are only “lucky” because they’ve worked hard to maintain good credit.

You can get lucky with these offers, too. Be diligent about paying your bills on time and stay out of credit card debt.

#2: Use a Credit Card to Save and Invest Money

Here’s a way to really put money in your wallet. Well, at least in an account. If you have an account with Fidelity, check out the Fidelity Investments Rewards Visa Signature Card. You earn 1.5 points for each $1 spent on purchases up to $15,000. After you reach that total, you get two points for every $1 spent on purchases.

Once you have 5,000 points, you can automatically deposit $50 into an eligible Fidelity account. You can choose a traditional IRA, Roth IRA, SEP IRA, or a 529 Plan that’s managed by Fidelity. You do have the option to redeem your points for travel, but don’t do it. Use a travel rewards card for that. Use the Fidelity card to put some dough into an account that you’ll need later, whether it’s for your own retirement or your kid’s college education.

#3: Use Your Rewards Credit Card for Major Expenses

You have to be careful with this, but if you have an emergency fund, you can pull this off with less risk. You use the card for the purchase or to pay for a service (like a plumbing disaster) and then you pay it off during the grace period.

I recently used a rewards card to pay for a new air conditioning system for my home. Less than two weeks later I used money from my emergency fund and paid the bill in full (can’t stand to have debt hanging over me). I earned $35 in rewards from this little maneuver. That’s not pocket change. That’s a cheap dinner for two, about 2/3 of a tank of gas, or a very nice bottle of wine to celebrate St. Patrick’s Day. Or I can put that money toward my daughter’s college expenses. Although, $35 would only cover about half of one book.

Soon, I’ll need a new fridge so I’m already planning to use a rewards card for the purchase.

[Credit Cards: Research and compare rewards credit cards at Credit.com.]

#4: Have a Low-Interest Card for Emergencies

The ideal situation is to have an emergency fund and a credit card with a very low APR for emergencies. But how many of us can pull that off given the economy for the past few years?

Not a whole lot of people. But if you’ve managed to take care of your credit score (see tip #1), you might qualify for a low-interest card. This is essential if you don’t have an emergency fund. What if your basement gets flooded or you need a new roof? Having a low-interest card doesn’t put more green in your pocket, but it lets you keep more of the green you already have in your pocket.

Photo: Category5TV, via Flickr

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