How Cash Back Cards Can Help You with Frugal Meal Planning

Earning cash back on your cards? It could actually save you in the long run.

Photo by andresrueda, used with Creative Commons License

When most people think of frugality, they don’t think of using credit cards.

However, the right credit card — used in the right way — can actually help you with your frugal meal planning.

Or any other household expense for that matter.

The right rewards credit card can help you earn cash back for purchases you already make, even as you practice frugal meal planning.

Use Your Credit Card to Make Regular Food Purchases

Naturally, you don’t want to use your rewards credit card to make extra food purchases. Follow savvy meal practices that include checking sales flyers and coupons for what’s on sale. Create a list of ingredients that you need, and compare those items with the sales and coupons. Base your shopping list around the discounts available. The key is to do your frugal meal planning and shopping as you normally world — as if you were going to pay cash.

Once you have your list, though, and head to the store, you don’t use the cash to pay; instead, you pull out your rewards credit card. Some of the things to consider as you choose your rewards credit card include:

Generous cash back
Higher cash back amounts in certain categories (like groceries)
Ease of redemption (some issuers send a check automatically)
Low interest rate (not strictly necessary, if you pay off the balance each month)

Do all your shopping with your cash back rewards card. You’re spending money you would have spent anyway, but with the bonus of earning cash back on top of saving money as normal. It only works, though, if you pay off your balance each month. Otherwise, the interest you pay on a carried balance can offset your cash back rewards — and possibly lead to debt.

Bank Your Cash Back

As soon as you receive your cash back, you can either use the money to buy food for the next week, or you can bank it in a high-yield savings account. If you use the money to help with your meal planning, it’s like getting some of your ingredients for free. Or, you can use the cash to boost your emergency fund. You can keep following your frugal meal plans, and shop as normal, but each time you rack up enough cash back for a rebate, bank it and earn interest on it. It’s not going to be huge amount of money each time, especially since you are a frugal shopper, but any little bit helps, and you can make it go a long way.

Choose your credit card wisely, since you will want to maximize your rewards. With the right credit card, you might even get a cash bonus for signing up. A cash bonus of $50, $100 or $200 could really go a long way toward your monthly food bill. If you have good credit, you can qualify for the best credit rewards, and take advantage of better terms. And, with the right planning, your credit card rewards can also be a helpful part of your frugal meal planning.

About the Author: Janet Hutchins is a personal finance writer for Credit, Eh, the blog of Credit Cards Canada, a resource for information on responsible credit card use.