Play Your Cards Right by Dr. Jason Annan

Play Your Cards Right 

When used wisely, credit cards can earn dentists tremendous rewards and returns. Here's how to get started.

by Dr. Jason Annan 

When I started getting heavy boxes filled with newly minted, rolled Sacagawea dollar coins, my assistant was sure I’d either lost my mind or was in serious trouble. The answer was “neither”: It was just another way I was using a credit card and banking the cash-back rewards.

Overhead is a fact of life for dentists; lab bills, utilities, supplies and repair costs all add up. But many colleagues and I work at leveraging these overhead costs to earn hundreds of thousands of credit card points, and then convert these points into truly valuable assets.

Pick a card—not just any card

Charging on a credit card and promptly paying the balance is basically an interest-free, one-month loan. Best of all, credit card companies will pay you for doing this! Hear me now: We all should pay off credit card balances every month. If you have to carry a balance or aren’t responsible with finances, this game isn’t for you. I’m not talking about buying things you don’t need; this is simply charging practice expenses that you must pay anyway. So how do you start—and, more importantly, how do you really make some money off your credit cards?

Wise dentists put every possible purchase on a good credit card. (I’ll define “good” in a bit.) I pay utilities, lab bills, supply bills, insurance … you get the idea … on credit cards. The only times I write a check is if the vendor won’t accept a credit card or if there is a fee of more than 2% for using a card. For those of you whose eyes have already glazed, just get a standard credit card that earns 2% cash back on all purchases—there are several. If you charge $5,000 a month in practice expenses on this card, it’ll earn you $1,200 yearly in cash back. No sweat, right? But if you want to be more than ho-hum, read on!

We’ve seen commercials for cards offering “cash back” or “double points” with purchases. Savvy dentists know that not all cards are equal and pick the best cards for their situation. Some cash-back cards give you a flat “rebate” with every purchase. The good cards earn about 2%, with some cards offering higher rebates at certain types of stores such as grocery, gas, etc. Anything less than 2% is likely a missed opportunity.

Some cards offer airline or hotel “miles” with every purchase. These miles are tied to a specific airline or hotel—a United Visa or a Hilton Honors Amex, for example—and can be redeemed only with that company. Then there are credit cards that offer points that can be used in a number of ways, including statement credits or (most lucratively) transferred to partner airlines or hotels. These are the most versatile awards cards.

Aim for a wide range of rewards

So, how do you move from being the doctor who earns $1,200 a year cash back to one who earns multiples of that? I hear from doctors who say they have a miles card and have amassed hundreds of thousands of airline miles on a single carrier. Well, that’s not diversification!

Dentists in the know will have several cards: some miles, some points and some cash-back. Some cards offer higher bonuses if used at certain stores, and we play these offers to juice our points earnings. I have a card that gives a cash-back bonus of 5% at office supply stores. I buy Amazon gift cards from a store like Office Depot and then use those for my online Amazon purchases, effectively doubling that basic 2% cash back-bonus. Some cards and airlines have online shopping portals, links to online vendors, that offer sizeable points bonuses and here you can greatly increase your points haul. Do this frequently and you’ll move from the “ho-hum” single card dentist to a points-earning monster!

Smart dentists switch cards depending on what we need: A future vacation means getting more airline or hotel miles, for example. Always earn and burn; don’t hoard miles or points. Airlines and hotels can devalue their miles at any time, so tomorrow’s value is never a sure thing. You can bet that during the COVID-19 travel shutdown, all of my purchases were going to a straight cash-back card!

Perks, points and payments

Here’s the rub: It’s not a sin to apply for and hold many cards. The juice is in the squeeze. Card companies offer huge sign-up bonuses for new cards. Some will even let you apply for and receive multiples of their cards, each with a bonus. For example, I recently signed up for an American Express card that offered 100,000 points, which I could transfer to airline partners or redeem for a $1,000 statement credit. That’s $1,000 for just opening a card and charging practice expenses that I have to pay anyway! For a particularly good offer, you could apply for separate cards for you and your spouse, doubling the reward.

In addition to the bonus, many cards offer useful extra perks such as free car rental insurance, warranty on purchased items, free nights at hotels and airline credits. After I collect the bonus, I cancel the card before any card fee is due. I treat getting a new card like shopping for fruit at a farmer’s market: I select the juiciest offers that will earn me tens of thousands of points with little effort.

The idea that having multiple cards hurts your credit score is overblown. A lot goes into a credit score, only part of which is open card accounts. Age, payment history and credit utilization are factors that will have a big impact on scores. I get new cards a couple of times a year and watch my credit score carefully. This has never affected my credit score more than a few points, and the effect disappears in 6–12 months. A missed payment will hurt more than opening a new card! Young dentists with very little credit history should be conservative playing this game.

First-class returns

After I earn a lot of points and miles, I want to use them. Some dentists like to exchange these for cash back. But the most lucrative way—my favorite way—of using miles or points is for travel.

Remember the 100,000-point bonus I received with my new Amex card? I can redeem 100,000 points for a business-class seat to Europe that might otherwise cost me $4,000 or more. That’s a better return than simply exchanging the points for $1,000 cash back. I’ve flown first class on the world’s best airlines—tickets that can cost many thousands of dollars—by using points, something I would never do if I had to pay cash.

In the year before COVID-19, I redeemed points for travel conservatively valued at $17,000, and I should hit that in 2022, too. On the Dentaltown thread, many dentists post reports of extraordinary vacations that were paid for entirely with points. There is an art and science to redeeming this way; the thread and other resources help.

This all adds up. Which is how I ended up with thousands of dollar coins. You see, I had a card that earned 5% cash back on all purchases. The U.S. Mint was allowing people to buy unlimited rolls of Sacagawea coins at par with no fees or shipping costs. For every $1,000 in coins I purchased, I pocketed $50. The coins went into the bank to pay the credit card bill.

The points playing field changes constantly, and offers like this come and go—card companies have gotten wise to the easy tricks. But there are still plenty of ways to make money on cards. The recipe is simple enough: Be smart and responsible with credit, use multiple cards and engineer the points-earning potentials, and grab those great bonus offers.

Author Bio
Jason Annan Dr. Jason Annan has been a private practice dentist in Mount Pleasant, South Carolina, for 13 years. He attended the University of North Carolina School of Dentistry. A husband and a father of two boys, he enjoys family vacations, sports, running and the outdoors. A local history buff, Annan is the author of a book on the history of Charleston, South Carolina.
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