Turn the tables and provide maximum value for yourself.
Merriam Webster lists the following synonyms for the word deadbeat:
- couch potato
- do-nothing
- idler
- loafer
- slouch
- slug
And here I am writing about winning by being a deadbeat.
You see, credit card companies have their interpretation of a deadbeat. And it’s not the person who runs their balance to the maximum and makes minimum monthly payments.
People who pay their bills in full every month are seen as deadbeat credit card customers.
These customers break the profit model for credit card companies. Interest and fees are enormous sources of profit for companies.
The card company still makes money on merchant fees, so don’t start feeling bad for them.
A normal American has over $6,000 in credit card debt.
Interest fees on balances like this can be debilitating, especially when the customer only makes a minimum payment.
Credit card companies must show you how long it will take to repay your balance if you only pay the minimum.
Check your statement some time. The amount you will pay and the time to pay off the balance are staggering. All of this is revenue for your credit card company.
Credit card companies love normal customers.
Deadbeat credit card customers pay no interest and collect valuable reward points.
Credit card companies must cringe when they create a statement entry that looks like this.
And those same customers tend to accumulate points and redeem them for maximum value.
In 2018 Chase reported a $330 million revenue drop in the second quarter, thanks to savvy customers redeeming rewards. These deadbeats maximized personal value from the cards and impacted shareholder value provided by the company.
Being a deadbeat is the only smart way to use a credit card.
I amassed a mountain of credit card debt in early adulthood. My cards were all maxed out, and the interest was compounding, making life painful.
I knew early on that I wouldn’t build wealth until I could pay off the debt and change how I used credit cards.
It took years of effort to erase my debts. Progress was slow and arduous at first. Eventually, I gained steam and won the war.
Now I use my credit cards for every possible transaction. You cannot pay a mortgage and most rent payments on a card.
Deadbeats like me push a large percentage of their spending through credit cards. This provides valuable consumer protection from credit cards and ensures a speedy accumulation of rewards.
Only buying what you can afford is essential when using credit cards. Afford doesn’t mean that you can make payments on the balance. It means that you can pay the balance in full when your next monthly statement arrives.
Perspective is everything as a deadbeat.
To the credit card company, you are a disrupter and don’t play the game like normal people. You refuse to pay your due, thus impacting profits.
As a deadbeat, you are looking out for number one. You ensure that you pay no interest fees, and you maximize the benefits from your credit cards.
One slip-up can wipe out your deadbeat status.
If you fail to pay your balance in full just once, the interest charges will instantly wipe out the value of your rewards. The credit card company will love you once again.
To avoid this fate, you need to maintain control of your spending. A budget can be beneficial, as can an emergency fund.
Lots of people don’t like budgets. You don’t necessarily need to track every penny you spend, as long as you can be confident that you will have enough to pay your credit card purchases in full each month.
An emergency fund of three to six months of expenses can be a lifesaver and help you avoid finance charges when disaster strikes.
Automation can also help you retain your proud status as a deadbeat. Schedule your credit card payments to pay the balance in full each month. This will ensure you never have a late payment. Always verify your statement to ensure you are not paying for a fraudulent charge.
Wrapping up
Credit cards can be dangerous and have devastating impacts on your finances.
Credit card companies profit significantly from customers who wind up drowning in debt.
By becoming a credit card deadbeat, you can turn the tables and provide maximum value to yourself.
Pay your balance in full every single month. Maximize credit card rewards and redeem them for the best value.
Be aware that it only takes one misstep to fall back in favor of your credit card issuer. Anytime you cannot pay your balance in full, you will completely wipe out the value of the rewards you’ve earned.
Interest is a killer.
Keep track of your spending with a budget or some other means that suits you. Maintain an emergency fund to cover unexpected expenses. Automate your credit card payments to ensure your payments are never late.
Deadbeat has a negative connotation, but a credit card deadbeat is a label worth achieving.
If you are already a deadbeat, congratulations!
Keep up the work if you are on a path to getting there. It’s not easy, but you will be grateful that you persevered when you finally defeat debt and become a credit card deadbeat.
