In a previous post I mentioned how to make dough simply by using credit cards for your regular spending habits. I came under a little bit of flack in a comment on fivecentnickel. So I figured I’d clarify since my original post missed some important points.

This isn’t about taking on debt to build wealth. This is about leveraging a payment method with some additional benefits. Credit cards offer excellent buyer protection from identity theft, rewards points (in my case 1-3% cash back, with a $50 bonus for getting $200 cash back), and are accepted nearly everywhere.

However, these benefits are immediately negated the instant you don’t make the full payment. As such, I do not view this as taking on debt. If you pay the minimum payment you are, for lack of better terminology, screwed. 20% interest is bad.

Now, 1% cash back isn’t a ton, but we’ll use this as a baseline. Calculating out all my regular expenses, such as heating bills, cell phone bills, groceries, eating out, etc. I spend in excess of $20K per year. If I charge them to my credit card, I wind up with an extra $250 in cash every year. If I write a check, or use cash, I wind up spending the same amount, but get no money back. Plus, it is significantly harder for me to keep track of my cash spending vs. my credit/check spending.

Now, for people who would have a hard time paying off their credit card, or who would tend to overspend with their credit cards, then I would suggest not doing this… But for people who are fiscally responsible, it’s a nice little extra cash infusion you can get every year without doing anything extra.

—Zach

So I woke up Wednesday morning. Life was pretty good. Then on my way to work I got a call from Chase, informing me that they needed to talk to me about some unusual transactions on my Freedom Card. They then asked me to press any key on my phone to continue. As I viciously dug about in my coat pocket attempting to find my phone the call hung up because I spent to long. No biggie.

Not giving any personal information on a call you do not initiate is a wise policy. So I called them back when I got to work, and discovered that, yes, some people in California used my credit card to pay for their gas at a 7-11. They then tried to get a $20 cash advance at an ATM. They asked if I recognized these transactions, and I said “no.”

They stated they have already frozen my card, and are reissuing a new one, transfering my balance to the new card, and sending it in the mail.

The flags that triggered it was probably the fact that They used my CC in California. Something I’ve never done before. I live in Michigan, 2/3rds of a continent away. A pointer to people stealing my identity, stay local! I’m far to lame to go some place cool, like California.

All in all a surprisingly painless experience. Just checked my Chase Online account, and the new card shows up already there. All rewards and transactions carried over just fine, and the invalid transactions do not. Pretty good experience, IMHO. It feels good to know that Chase has my back.  The only question that remains is “how many false positives they get?”

—Zach