What are "Grocery Miles" you ask?
Well, I just made it up, but it is an easy way to introduce you to the concept of earning free air miles on literally everything you buy! Well, nearly everything.
Yes, I am suggesting you get a credit card that earns you free air miles -- with some serious caveats. It's a brave new world from a credit card company's standpoint. Credit card supply has reached the saturation point. Everybody is offering you a credit card!
Consumers, thank goodness, have gotten smarter about how to play the credit card game, so credit card companies have upped the ante -- you really have to be careful to guard your credit and not incur any fees.
It's gotten a lot harder for credit card companies to make money so they've had to get real creative.
As long as you're selective and read the fine print, their creativity comes out in your favor. In order to start earning Grocery Miles we first have to wade through the sea of credit cards!
It is interesting how the concept of building loyalty has turned into every company of every kind offering you a credit card. All of the credit cards that earn you miles have a dual purpose -- build customer loyalty and profit! There are significant differences, though that you really do need to pay attention to.
There are several sites on the internet that offer you a road map through the different cards. I like www.creditcardguide.com for the States and in Canada I like www.chargecards.ca/reward_credit_cards.php.
Grocery Miles Criteria:
There is no reason for you to settle for less than this list of criteria to earn your Grocery Miles! All the competition to get your business is definitely in your favor!
In the States you can find cards that don't charge you an annual fee.
In Canada, the best ones I've found that meet this criteria list do charge an annual fee, usually between $120 CAD and $150 CAD.
There is also no reason to limit yourself to a brand specific credit card at all. Stick with the majors -- Visa is my favorite because I find it is the most globally accepted.
My financial planning hat just flew onto my head, so I can't help advising you not to carry more than two credit cards and one is even better.
Credit is a very funny thing, if you have too much credit available, your credit score will get dinged, if you don't have enough credit available, and things are maxed out, your credit score will get dinged. If you have too many revolving accounts your credit score will get dinged.
If you have accounts that haven't been open long your credit score will get dinged. It's a tenuous game! Err on the side of caution and have a low interest line of credit and one credit card. Use all the rest of the credit card offers to line your bird cage!
(I'll discuss frequent flyer miles and straight reward cards on a different page.)
Here you want to do your homework, select a major credit card that meets the criteria above, then you want to use it for literally every expense you can to earn your Grocery Miles. Then pay it in full, on time, when you get the bill each month.
So, if you can use it to pay the garbage man, do. Just pay it all off at the end of the month so you don't incur any interest charges.
You MUST pay it all off each month or you defeat your purpose. The idea is to just USE the credit card, and get the points! Do NOT do this unless you can pay it all off each month! You'll end up paying dearly for those points!
Let's do some math:
US Median Income 2012
- 32.7% Tax
= $31631.00 After Tax Income
(Source: US Bureau of Labor Statistics)
Canada Median Income 2012
- 44.9% Tax
= $25,621.50 After Tax Income
(Source: Canada Statistics)
US Average Family Budget
(Source: US Bureau of Statistics)
In my years as a financial planner, these official budgets always confounded me, because they were pretty far off from my clients and my own personal budget -- but I guess it's a starting point for you to figure out your budget, if you don't already know it.
Now that I live in Canada, my personal budget is significantly different. I combed Canada Statistics and couldn't find similar information. I guess I'm still finding my way around?
The whole point of this exercise is for you to identify HOW MUCH of your budget can earn you free air miles! In the above budget, for instance, I see at least $12,948 that for sure could be placed on your miles card and paid off when the bill comes each month! You may be able to find more!
Another plus to purchasing everything you can with your miles credit card is the purchase protection it offers. This has turned out to be an extra "benie" for me. If you purchase something and need to return it right away, you're covered.
If someone steals your card, you're not responsible for any charges they make. You can also dispute any charges if you are having trouble getting a merchant to "do the right thing" if they have less than a reasonable return policy.
Good Grocery Miles cards give you an airline ticket for as little as 10,000 points. That sounds like a lot of groceries but you'll be amazed how fast everything adds up before you find yourself lounging by a pool in some exotic locale!