Credit CardsSaving Money

A Super Simple Way to Save Over $400 a Year While Spending Normally

How I easily save $400 a year while spending normally

I might blow your mind with this post as I’m going to discuss something that many might think is strange. I don’t find it strange, but that’s because I live it every day and have no problem with what I do and I how I do it. OK, I’m leading you on a little bit here, so let’s get right to the point.

I use credit cards for every purchase!

OMG! How could you??

Is that what you’re thinking? How can someone who had been in credit card debt and paid it off talk about using credit cards? Why would I do this? Well, let me first say that if you’re still in credit card debt, then you need to work through that. You need to find out why you’re in credit card debt and get out. It took me four years and a complete lifestyle change to get out of credit card debt, but I did it and here I am!

There are some financial gurus who hate credit cards and tell their followers they should never use them. That’s fine with me. I’m not someone who follows them. I do what works for me and I know many of my readers do something similar. See, credit cards aren’t what go you into debt, you are. No credit card forced it’s way out of your wallet/purse and told you to swipe it through at your favorite store. That’s not how those cards work. They don’t force you to use them. Using credit cards and getting into debt is typically a psychological thing. You use your card for whatever reason and then continue to do so with little regard.

Trust me, I was there. I had to figure out why I was spending so much and why I was using my credit cards for things I didn’t need. Once I realized it was my way of thinking that caused my debt, I fixed it and have been using credit cards for every purchase successfully for the past four years. It all came down to understanding wants and needs for me. I haven’t paid a dime in credit card interest (minus one time when I messed up a scheduled payment, but they didn’t charge me for a mistake). See, you can consider me a reformed credit card user. I’m cool with that.

Now that we got that out of the way, I’m going to show you how I save over $400 a year by just using one of my credit cards. I actually have two that I use regularly and are my go-to cards. One is a travel rewards card and the other is a cash back card. I’m going to focus on the cash back card. That is how I save money every year just by using it.

Making Cash Back Easy with American Express

Right after I got out of debt and paid off my last high interest credit card, I realized I needed to focus on trimming down my credit cards and only selecting those that give me perks. When you have a high credit score, you can get almost any card you want. I’m lucky to have a credit score at the high end of the FICO spectrum.

For a few months, I reached out to friends and found some bloggers online talking about earning easy cash back with a credit card. Then they mentioned American Express. I had never used American Express, but I heard it wasn’t accepted everywhere. While that is true, I use it at many places besides small merchants in smaller towns. Grocery stores, big box stores, and gas stations all take American Express.

After researching for a few days on the different types of cards, I decided to apply for the American Express Blue Cash Preferred card. It was a hard choice since there was a $75 annual charge on the card, but I wanted to see if annual fee cards really do give you better rewards.

This particular card comes in two version (the Blue Cash card). You can get the Everyday card and the Preferred card (what I have).

These two cards give you cash back (statement credits) when you use it for eligible purchases. Most purchases are eligible in my experience, but you’d need to look at all the terms to find out if a purchase won’t be eligible. Let’s look at what they both provide you.

American Express Blue Cash Everyday Card

  • Get $100 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $100 back in the form of a statement credit.
  • Earn Cash Back: 3% U.S. supermarkets up to $6,000 per year in purchases (then 1%), 2% U.S. gas stations & select U.S. dept stores, 1% other purchases. Terms and limitations apply.
  • With the Blue Cash Everyday® Card, you can start earning cash back. No rotating reward categories. No enrollment required.
  • Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. Cash back is earned only on eligible purchases.
  • No annual fee. Plus, 0% intro APR on purchases and balance transfers for 15 months, then a variable rate, currently 13.24% to 22.24%, based on your creditworthiness and other factors.
  • Terms and restrictions apply.

Learn more about the Blue Cash Everyday card

American Express Blue Cash Preferred Card

  • Get $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $150 back in the form of a statement credit.
  • Earn Cash Back: 6% U.S. supermarkets up to $6,000 per year in purchases (then 1%), 3% U.S. gas stations & select U.S. dept stores, 1% other purchases. Terms and limitations apply.
  • With the Blue Cash Preferred® Card, you can start earning cash back. No rotating reward categories. No enrollment required.
  • Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. Cash back is earned only on eligible purchases.
  • 0% intro APR on purchases and balance transfers for 15 months, then a variable rate, currently 13.24% to 22.24%, based on your creditworthiness and other factors.
  • Terms and limitations apply.

Learn more about the Blue Cash Preferred card

How to Save Over $400 a Year

OK, let me get to simple savings here now that I’ve shown you the card I use. Again, I’m not afraid of using credit cards as I’ve fixed my spending problems. I use my credit cards to get protections you don’t receive with a debit card and to earn a little rewards for the spending I normally do.

I, again, want to make sure you don’t do this if you’re not comfortable with using credit cards. If you can’t trust yourself with your spending, then don’t do this. Many people use credit cards responsibly every day. I’m one of them now and I’m proud of that fact. If you don’t treat your cards like a loan, then you can enjoy the benefits and security that come with them.

In the above area, I highlighted a section for each card and that is the rewards. This is what you get when you use the cards. The Blue Cash card gives you a benefit when at the grocery store and the gas station specifically. Since those are my two biggest expenses outside of my mortgage, why not get a little cash back when doing some regular spending? I see no harm in it.

If you have the Blue Cash Everyday card, then you won’t save as much since the percentages are smaller. This is because of the annual fee on the Preferred card.

If you spend $6,000 a year on groceries ($500 a month), then the preferred card can give you the biggest benefits and they do for me. My family spends about $500 a month on groceries in some form of fashion. No matter what grocery store we go to*, we get 6% back when we use our American Express Blue Cash Preferred card. I don’t have to do anything, but swipe my card and I get the 6% cash back.

*I’ve heard you might not get this at Walmart since the eligible purchase uses whatever code American Express gives the merchant. If they don’t classify the store as a grocery store, then you might only get the 1% cash back. I don’t shop for groceries at Walmart, so I’m not worried about this. I use dedicated grocery stores.

Since we hit the $6,000 mark each year, I’m able to save $360 with cash back using my AMEX card. It’s that simple. Since I was going to make those grocery purchases no matter what way I paid, why not get some money back? Think what you can do with an extra $360 a year? I’d throw it in my investment account and let it grow over the years. It would probably go in my Betterment account, or maybe even Wealthfront or TradeKing. You can’t grow your money unless you save and invest!

OK, now let’s figure out how we get over the $400 mark. It comes down to my other normal and big expense…gas!

Let’s face it, we drive a lot in the US. We have big cars with large gas tanks and we drive a lot. I don’t drive as much since I quit my job, but I still drive every day to take my son to daycare and pick him up, along with making trips around town. My wife drives a lot, so when she uses her Blue Cash card, she can get even more cash back.

My Blue Cash Preferred card gives me 3% back at gas stations (no limit) each and every time I swipe it. It’s the only card I pull out when buying gas. So easy to earn 3% back.

Here’s a little math for you.

Spending TypeAmerican Express Blue Cash EverydayAmerican Express Blue Cash Preferred
Total$414/year cash back average$216/year cash back average
Groceries (max $6,000/year)$360/year maximum$180/year maximum
Gas (3% back, no limit)*

*based on $150/month average
$54/year average$36/year average

As you can see, there is a possibility of earning over $400 per year in cash back statement credits if you use the American Express Blue Cash Preferred card. Now, you can get over $200 if you use the no-annual fee card as well, but you get more for your buck by going with the Preferred card. Yes, it has an annual fee of $75, but you’re still on top. Also, you still get 1% cash back on every purchase and that includes after you hit the $6,000 mark at the grocery store.

This might be controversial, but why not get some cash back when you have to spend money? We all buy gas and groceries, so if you’re good with credit cards, then get some money back. This is the easiest way to save $400 a year with doing almost nothing. You can earn more if you are above my averages.

This only works if you pay off your balances every month. If you don’t have the discipline to track your spending (try Personal Capital for free), then DON’T try this at all. I wouldn’t have done this method when I was in debt, but I figured out what I was doing wrong. If you’re not sure about doing this, then just look at our other great ways to save money that don’t involve credit cards. There are a lot of them!

If you’re interested in trying this out, make sure to learn more about the American Express Blue Cash Preferred card. You can get $150 cash back when you spend $1,000 on the card in the first three months. If you’re not interested in an annual fee (I know some aren’t), then take a look at the American Express Blue Cash Everyday card. They have a $100 cash back bonus for spending $1,000 in three months.

Do any of you use credit cards for every purchase and pay them off each and every month? Do you take advantage of cash back credit cards or ones with travel rewards? Any reason you do or don’t?

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Grayson Bell

Grayson Bell

I'm a business owner, blogger, father, and husband. I used credit cards too much and found myself in over $75,000 in debt ($50,000 in just credit cards). I paid it off, started this blog, and my financial life has changed. I now talk about fighting debt and growing wealth here. I run a WordPress maintenance and support company, along with another blog. It is Empowered Shopper, which helps people get information about products they want to buy. You can also check out Eyes on the Dollar, which is a great blog that I co-own.

6 Comments

  1. March 7, 2016 at 6:51 pm — Reply

    As long as you have the discipline to pay off the balance each month…..which many people don’t have.

    • March 7, 2016 at 8:21 pm — Reply

      Well, that’s the entire premise there. If you can’t use them, then don’t use them. If you can, then enjoy the easy savings!

  2. March 7, 2016 at 8:58 pm — Reply

    I would love to reap the benefits of using cards for cash back rewards; however, I know my weaknesses. At times (especially during emotional distress) it takes nothing for me to get lazy while shopping and just throw my plan to the wind and charge up things I never intended to buy. I just recently got rid of my last bit of credit card debt I incurred last year when I was pregnant with my son for those very reasons. I’m going to give myself a few years to see if I can become more disciplined and re-evaluate the option of earning cash back in the future.

    • March 7, 2016 at 11:53 pm — Reply

      It’s sounds like you know your weakness and that’s the most important. I wouldn’t want anyone to use this method who isn’t dedicated to staying away from credit card debt. I found out my issues and realized it wasn’t credit cards, but my mentality. Now I can use them with no problem and no debt. It took a lifestyle change though.

  3. March 8, 2016 at 5:59 pm — Reply

    I’m definitely one of those that uses a cash back credit card for all my purchases (and pay it off in full each month). I’ve tried it with a few different cards trying to find the best rewards for my purchase patterns. 6% on groceries sounds really good!

    • March 9, 2016 at 9:33 am — Reply

      Yeah, if you have the discipline, why not get something for your regular spending. The 6% on groceries and 3% on gas is always nice to see. They also have some other good rotating cash back rewards cards, but I like my AMEX.

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