Give me my points and miles!

Over the weekend, I went to a couple of social events where people know that I'm coordinating our church's Financial Peace University class. Inevitably, we end up discussing topics revolving around finances.

One topic that comes up regularly is purchasing items using a credit card in order to gain points or airline miles. For me, using a credit card to get airline miles is not a big concern because my family and I fly once or twice a year. I can't justify using credit cards to get cheaper flights for a couple of reasons:

1. It's a well known fact that if you pay for items using a credit card, you end up paying 18-20% more than if you were to pay purchases with cash. The full amount of the purchase doesn't register with us when we pay with plastic. There's more "pain" when we pay with cash; we feel it more.
2. You put yourself in a dangerous position by trying to "beat the system" with credit card companies. These ruthless companies are known for charging late fees (even if you weren't technically late with a payment) and changing interest rates on their customers. I think people are just playing with fire if they decide to use them, even if you are faithful in paying the balance each month.

It seems to me a better course of action would be to get on a solid budget, use a cash envelope system for purchases, and plan and save for future trips. In the end, I'm betting that you would save more money with this approach than using credit cards to gain airline miles.

Larry