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High-yield savings and rewards card pay off

You don't have to look very hard to find a high-yield savings account these days. Coupled with a cash-back rewards credit card, you could almost make money by spending. In fact, if you've mastered the art of budgeting and pay every bill in full and on time, you could be well on your way to supplementing your income by spending on credit and paying your bills, says the Frugal $ense winner for March, Patrick Hardy. Congratulations, Patrick!

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Bankrate: Great tip. How did you come up with it?

Patrick: I was looking for a way to come up with a few extra dollars when I found out about the high-yield savings account; I figured I could make a few bucks while waiting to pay bills.

Bankrate: Have you always been smart about credit?

Patrick: I didn't even get my first credit card until I was a senior in college and I always paid it off every month. But about a year ago I got a card that was paying 5 percent back on gas and 3 percent on everything else. I started charging everything on it just to get the cash.

March's Frugal $ense winner: Patrick Hardy
Patrick Hardy of Cumming, Ga., won $100 for submitting the following tip:

Treat your credit card like a debit card
My wife and I treat our credit card like a debit card. Any amount that we charge to our credit card is transferred to our high-yield savings account that is currently paying 5 percent. At the end of the bill cycle, we pay the bill online via our savings account on the day the payment is due. Not only are we earning interest of around $10 per month, we are using our rebate card that pays 3 percent on all purchases. We are averaging monthly checks of $35 from our credit card in rebates. We are now charging every bill that we can to the rebate card to earn the interest and the rebates.
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 Patrick Hardy

Bankrate: Are you good with budgeting?

Patrick: Oh yeah, my wife and I have a detailed budget.

We keep it on a spreadsheet. And every month we compare it -- we've kept it for a couple of years now, so we can see trends. We re-budget every September. I don't know why we picked September but we picked September. So, we'll re-budget for the next year based on the trend for the past year.

It's easy when you have the history, before that you're kind of guessing.

Bankrate: It must take a lot of discipline to keep at it throughout the year.

Patrick: It does, my wife was more concerned about it than I was when we got married. I kept an end-of-the-month checkbook where I'd go in and see what I had spent but she ended up wanting to get more detailed.

Bankrate: You're lucky, she must be organized.

Patrick: Oh she is. Very organized.

Bankrate: Do you ever have trouble keeping your balances manageable?

Patrick: Sometimes if we take a trip we may pay it off over a couple of months. Also, we just called and negotiated the lowest rate on our card. I think we ended up paying only 7 or 8 percent.

We have a guy in Atlanta called Clark Howard and he said, just call and ask for a lower rate or threaten to cancel and so we just called. And any time they try to adjust our rate we call and say, hey I'm going to cancel my card, I can get a better offer from somebody else.

They don't want to lose a customer, so they end up lowering the rate.

Bankrate: Do you have any day-to-day money saving tips?

Patrick: We try to look at the big picture. I look at my budget every year and set a goal to reduce it by X number of dollars. And this year I set a really ambitious goal of $200 that I want to knock out -- right now I've knocked out $120. Originally, I didn't think I could cut out anymore. Usually, I shoot for about $50 or so. So right before January I decided, for 2007, I want to knock $200 out of the budget.

Bankrate: So what do you do with the extra money?

Patrick: Put it back to our savings, we're trying to get down to one salary, we're living on my salary now and putting my wife's into savings. We want to start a family so we're working toward one salary. We're trying ... we're almost there.'s corrections policy
-- Posted: April 27, 2007
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