Sunday, August 27, 2006

Pennies from Heaven - Part 2

We continue in setting up a systematic procedure for handling extra income that floats down from the sky. If you are just joining this quest, see Part 1. In this part we look at credit card cash back.

Credit Card Rebates

Some credit cards include offers for cash rebates on purchases. First of all, you should only be using zero-balance credit cards for ongoing purchases i.e. you are paying off the full billing statement balance each and every month. Hence any rebate money is indeed extra available dollars.

Such rebates typically take the form of actual cash set to you via a check after some minimum amount is accumulated ($50.00 in rebates is a typical minimum dollar amount). Since these rebates are not tied to a specific purchase, such rebate checks should be received as new income and allocated as desired. Note, only allocate the dollars after the rebate check is received and deposited into an Account as with any other income source.

However, some credit cards give you the rebate as a credit against your next billing statement. In this case, the cash saved is from the reduction in the actual bill to be paid verse the total purchases billed. These saved dollars are not “re-received” into your Checking Account, but simply don’t leave. Hence there is no income to be deposited, but only dollars to be re-allocated back to one or more Budget Categories of your choosing. Such allocations should be given some type of identifying reference such as “Credit Card billing rebate” to help in any future research.

In Part 3 we will take a look at Gift Cards.


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