Hey, here’s $161.87 for free… Finally Making Smart Choices

Erik Financial Education, Thoughts of a Mastermind 4 Comments

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“Would you like to save 5% today by applying for the Target Red Card?”

I’ve been to Target 114 times in the past 2 years and every time I got to the cash register, the cashier said, “Would you like to save 5% today by applying for the Target Red Card?” I always said, “No, not today.” What a big doh I had when I actually realized I was wasting money… a total of $161.87.

Like I said, I’ve been to Target 114 times in the past 2 years, and spent $3,237.36 on those transactions. Each and every time, I was leaving at least 5% on the table. When you hear 5%, you don’t think it’s much. However, when compared to other credit cards, 5% is an insanely good reward for spending money. My main credit card only gives me 1% cash back on all purchases (So, really, I cost myself $129.49).

There are two takeaways from this experience that I want to bring to light: number one, when a person is young, a person should try to build credit as responsibly as possible. By building credit at a young age, that person will be more attractive to borrowers in the future and will be able to take on more debt to finance a company or get a better interest rate on a home in the future. Number two, the amount of savings over a lifetime taking advantages of programs like these can have on a person.

Building Credit

Building credit is huge in today’s world. If a person wants to start a business, invest in real estate, or buy things on credit in the future, they will need to convince a lender to do so. How do we build credit? Simple: open up different lines of credit, be it credit cards, loans (for cars, education, houses, boats, home improvements, etc), lines of credit, and pay them off (by making timely payments). It’s that simple! (Make sure to pay it off on time though!)

Improving my Credit Score

Credit scoring companies recommend having more than 12 open accounts at a given time to obtain a favorable score. While this has a low impact on your score, it is still something lenders will consider. I only have 3 currently, which is one of the reasons I finally applied for the Target Credit Card.

In addition to opening another account, my utilization will decrease. Credit scoring companies recommend keeping utilization under 30% if possible. I usually never have to worry about being utilized more than 30%, but there are times when it creeps up to 50% if I’m doing a project or an unexpected expense needs to be paid.

For number two, my lifetime savings will increase by a few thousand dollars. As mentioned above, in 2 years, I spent $3,237.36 at Target and would have saved at least $161.87 through their rewards program. Let’s extrapolate that over 5 years, 10 years, and 30 years.target credit card savings

A savings of almost $5,000!?!? That’s not even considering any investing I could do with these savings over those 30 years!

Conclusion

To sum up, I was stupid for the past two years and missed out on $161.87. Going forward, I will be able to save 5% at Target and as time goes on, this will help me in my pursuit of financial freedom.

What other rewards cards should I be taking advantage of? Home Depot and possibly Costco are next on my list.

Erik

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Comments 4

  1. Hi Erik,
    I like loyalty programs so looks like a no-brainer to me! Definitely get a HD card though – I’m a shareholder and your purchases will help ‘my’ company 🙂 Just kidding.

    Target’s a little expensive for us and not so conveniently located so we tend to shop at Walmart/Meijer. I don’t know about other stores – maybe Amazon if you spend a lot there?

    I personally use a Delta travel card for most of my purchases, but then I know I’ll be buying air tickets each year so this works for me. Although the ‘points’ aren’t that high, they have an online shopping mall where you can earn bonus points just for clicking through. I think many Visa / Amex cards etc offer this; kind of like ebates.com.

    Best wishes,
    -DL

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      Author

      Haha! I can help your company out 😉 Usually I’m doing projects in the summer so it’s a hundred dollars here, a hundred dollars there…

      Amazon may be worth looking into since I usually get books through them. I’m exploring different options. Life’s a learning process!

      Thanks for the comment,

      Erik

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      Author

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