For the last seven years, I paid off my credit card bill whenever it arrived, I thought I would look at possibility of rewards credit cards. After doing some research, I ended debating between one that would help me pay for a car and one that would help me pay for my mortgage. (Now that I am looking at a shorter timeline for car replacement, I am glad I chose the former.) Once the decision was made, I applied for and received a Citibank Driver's Edge Platinum Rewards card.
As many financial people tell you, even if you no longer use a credit card, do not close the account. (This keeps the amount of available credit versus credit card balance higher as well as giving a longer credit history as I understand it.) Therefore, my other credit card was retired but not closed, and I solely use the Driver's Edge Rewards card. I am a one-credit-card gal and it keeps my life simple.
However, I neglected to take advantage of all the perks provided by the rewards card. Not only did I receive an introductory 5% back on my purchases at grocery and pharmacy stores and gas stations when I used my card (drops to 3% after six months), but I could get additional rebates on my accumulating mileage and submit my car repair bills for credit. Unfortunately, while I did read the booklet detailing my rewards, I retained only that I needed to submit evidence of my odometer reading. As a result, I waited until I finally had my oil change before filling out the form.
Turns out, I could have applied for the mileage program, but it would only be counted when I submitted a receipt with the odometer reading on it. Basically, I cheated myself out of five months worth of mileage. With my potential car purchase closer than I would like, every little penny helps!
I did not delay any longer. I sent out my enrollment form for the mileage program and then submitted my bill for the oil change and small car repair at the same time. I will take the extra $2 toward a car purchase any time. I can only accumulate up to $5,000 in five years before having to use my rewards, but that time frame works for me. Right now my potential reward stands at $50, but with a big repair and increased gas costs (plus all the miles I put on my car), this number should increase at a faster rate.
Currently, my auto savings account is around $1,000. With more of my rebates, refunds, extra money, unexpected bonuses and cash for selling stuff going to this account, I think I could get to $2,000 by September 2008, one year after I started saving for a car. I also intend to automatically save more money for a newer car and that will add up even if the interest rate on my ING Direct account is not impressive.
Hopefully, my car will last another three to four years so I can accumulate more money to get myself a newer car. While I was aiming for a newer used vehicle around 50,000 miles for ~$6,000, I may have to set my sights higher especially as more fuel-efficient models around three years old seem to be priced ~$10,000. At least I should have a decent down payment on a newer car if the time frame is shorter than I hope for.
Edit: As it turns out, I misunderstood the rewards program. When I sent in my car repair bills, Citibank redeemed some of my rewards dollars against the repairs. Only purchases and mileage add to the total; car purchases and fixes decrease the total.