How to Get Credit Card Companies To Pay You

Tracking How Credit Card Companies Paid Us over $1,000 in 2022

This blog post is by request. Usually I don’t dive too deep into this topic but if the people want to know, why not. Often consumer debt is relegated to “Bad Debt” category, extreme over-leveraging or some form of consumer conspiracy. I, on the other hand, don’t subscribe to such speculation.

Keep it simple. Facts are the facts.

The average American household’s credit card balance for 2022 closed out at $8,900. With consumer debt up 4.5%, high inflated prices are taking their toll on savings rates and wealth. My wife and I walked into 2023 with over $11,000. We are definitely not a poster child for the Dave Ramsey circle.

Is this some plot by the invisible government hand? Nope, just people spending to look wealthy on credit cards. The credit card companies are simply offering a service. Even in the absence of credit cards, people had, have and will continue to over play their hand. Why?

Some risks tend to be rewarding.

This is not a judgement call on human behavior, just saying that facts are facts. Most families will end up spending nearly $500,000 in interest in their lifetime. From student loans, credit cards, car loans and personal loan; business are merely lining up to take your money in exchange for stuff.

However, there is one twist.

Our credit card companies pay us

Over time, we inverted the relationship from pure debtor. We own stocks in all sectors, specifically the Financial which pays us Dividends. Picking up on average $300 dividends per month. Additionally, we rack in the sweet rewards, benefits and cash back options.

I have to stress this isn’t easy per say and it took us some time. This isn’t some trade secret either, so feel free to share it a friend. With that said, here’s the breakdown:

(Net) Total for 2022 was $1,272.25. Up 2,127% from 2021

Annual Fees and Finance Charges (-) $2,176.53

The first and the most unavoidable part of this equation, is the annual fees. The second part are the recurring fees based on your revolving credit card balance.

Be aware the credit card companies hire behavior psychologist, economists and statisticians to see how much they can reel in new clients. They spare no expense since this spells out major revenue. Credit card companies hauled in $176 Billion in 2020. Interest fees accounted for $76 billion and interchange fees accounted for $51 billion in 2020. While annual fees netted $13 billion.

Based on the CFPB report ranging from 2018 through 2020, Americans paid on average $120 billion in credit card interest and fees each year. Unfortunately, this proves that the intro packages are just the bait.

Economic business cycle estimates and analysis are conduct with a savings and debt in mind. Check out Fidelity’s Q4 estimations going into 2023, below. They expect a soft recession in Euro due to the anticipate credit usage increase.

How to Avoid Credit Card Companies’ Annual Fees (-) $1,393

While credit card annual fees are avoidable, based on our wants, we end up paying the big bucks. The annual fee will show up on your credit card statement once per year. We carry an every day card, a cash back card and two travel reward cards.

Our fees show up at the end of the year or at the start in one lump sum charge. Our biggest one is $695 per year. But don’t worry, we make the best of all the sweet rewards.

If you are on the fence about paying an annual fee, read this post by CNBC.com; 5 questions to ask yourself if you’re on the fence about paying an annual fee for a credit card. The bill isn’t for everyone.

Recurring Interest Charges (-) $783.53

The completely avoidable part are the recurring fees.

We were carrying a seismic amount this year starting at $11,450 and continuing the trend with emergencies and other massive expenditures.

At the apex, we had over $31,000 in credit card debt. Yikes. In total, this cost us $783.53 or about $65 per month.

While it’s not our finest financial moment since we could have used nearly $800 on anything else, it was steal since we put so much stress on the cards.

Even after all the payments, we still ended up with around $12,500 in credit card debt to start 2023. We learned nothing. But don’t worry we will be debt free by mid year. Maybe?

Our Credit Card Companies’ Rewards, Benefits, Redemption and Cash Back +$3,434.44

The redemption is where all the positives come from. We were hit with two family emergencies and needed to repair the AC.

So mitigate that, we used points. Lots of points. While travel gurus would advise not to, we do what we want.

The rest of the offset came from the numerous benefits like $500 off of a hotel stay, the $300 flight credit and etc.

We also received $240 entertainment credit for Audible, New York Times and Disney Plus.

The grand total was a massive saving of nearly $3,500.

Misc. Trade Commissions? +$14.34

There was some odd investment trades classified as fees and corrections. I left the net of $14.34 in here. Oddly enough, I was able to track all of these fees using the Free app Mint.com.

Along with two other apps, Budgeting is a lot easier than advertised.

In Summation, Credit Card Companies Pay Us Instead

While I’m not here to tell you to copy and paste. That would be negligent. I learned how to use money, leverage and strategies to pay down debt in a way that benefits my family. It’s really up to you in how you use money.

I just happen to be very calm under money pressure. So here’s the recap:

• Finance Charges -$783.53
• Points and Reward +$3,434.44
• Service Fees -$1,393.00
• Trade Commission +$14.34

(Net) Total for 2022 – $1,272.25

Final Thoughts going into 2023?

I’ll repeat it again. There are multiple ways to build wealth. Some of those ways might not be a great fit for you. Find the ones that are. Don’t copy paste. And try not to blindly follow. So it begs the question. Is all debt, bad debt?

Well it depends on the user.

With that said, check out the Financial Griot Podcast were we chat up all things Financial Literacy and Life. Or link with me on Instagram.

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