Use your credit cards wisely

This text is based entirely on my own spending habits and payment capacity. Credit cards require discipline; if you aren't a "totalero" (paying in full every month to avoid interest), the interest will wipe out any benefits. And just to be clear: I’m not here to brag; I’m here to share how I use them for my own benefit.

Why use credit cards? 💳

I was taught to be afraid of them and to never have more than one, but here we are... hi Mom. Used intelligently, cards are the key to your financial future. They aren't just for immediate perks; their most important function is fueling your credit score.

Having a solid history opens doors to much larger loans, like car or mortgage loans (someday 😢), and most importantly: it grants you access to better interest rates. In the world of credit, the better you behave with your cards, the cheaper they’ll lend you money for what really matters later.

From points to real benefits 📈

My journey started with BBVA, but I soon realized their points are worth very little when you actually try to redeem them. I decided to look for tangible value instead:

1. The jump to Citibanamex (Platinum): I got it mainly for concert pre-sales and the 2-for-1 benefit at Cinépolis VIP (thanks to it being a Mastercard Platinum). Also, during events like "Hot Sale," Citibanamex usually offers the best promotions alongside Banorte.
2. The daily driver (Banregio): I wanted simplicity and found the Banregio card. No annual fee and no fine print. Eventually, I migrated to the Banregio Platinum, which maintains that same zero-cost philosophy. It’s my go-to card for general purchases.
3. Niche specialization (Santander Like U): I originally got it for gas, and although categories have shifted, I still use it for pharmacies, telecommunications (Internet), and restaurants. Pro tip: you have to look at cashback under a magnifying glass; not all establishments qualify, as it depends on how their merchant terminal is registered.
4. The "free" groceries (Costco Citibanamex): If you shop at Costco, this is a must-have. You get the "cash price" plus annual cashback. At the end of the year, that accumulated amount is like getting a free grocery run. But beware: I have it because I already shop there; don't change your habits just to chase rewards.

Covering every card on the market would take forever, so here’s where you can dig deeper: Banxico (Mexico’s central bank) publishes official credit card comparisons.

Annual Fees 💸

You might ask: Why pay $2,725 MXN a year for a card? (Banamex Platinum). If you see it strictly as an expense, it makes more sense to look for no-fee options or avoid cards altogether. However, here’s the point: if you're a concert fan and can only buy during the general sale, it's almost impossible to beat the scalpers—who will charge you way more than that annual fee for a single ticket.

Also, there’s the "retention trick": once you’re a frequent customer, you can call to cancel and, often, the bank will waive the fee to keep you (it doesn't always work; once they just cancelled it without hesitation 😂). It’s about building a strategic relationship with them.

The Premium League: American Express ⭐

I’m currently testing American Express to see if I can justify their annual fees. What stands out for me in the credit version is that all purchases above a certain amount are automatically split into interest-free installments (MSI). The benefit? Unplanned heavy expenses, like car insurance or major maintenance, can be deferred over 3 months instead of draining your cash in one go.

The reality of the benefits ⚠️

It’s important to be honest about what I haven’t used or what doesn't work that well:

• Insurance and Warranties: Although I have baggage loss insurance or extended warranties, I’ve never had to use them, so I can’t vouch for their efficiency.
• Price Protection: I’ve tried using it, but the process is tedious. The paperwork takes so much time that it’s often not worth the effort.
• Other worlds: I know there are cards focused on flights or miles, but since they aren't my priority right now, I don't have them. If you travel a lot, you could definitely score free flights.

Flow Engineering 🔧

Many people pay their card as soon as they make a purchase for fear of forgetting the date. As an engineer, I treat my finances like an optimization algorithm:

1. Staggered closing dates: I have cards that close on different days of the month. I always use the card that just closed; this grants me up to 50 days of free financing.
2. Bridge investment: The money for the payment stays in an investment account (Cetes, Nu, etc.) generating daily returns until the last possible second.
3. The final payment: I pay a couple of days before the deadline to avoid technical glitches. The interest generated stays in my pocket.

The CAT Myth 🎭

If you pay in full every month (totalero), the CAT (Total Annual Cost) doesn't matter. Just look at the annual fee and whether the benefits you actually use outweigh that cost. However, you need to understand what happens if you slip up:

The danger of not paying in full 🚨

Let's say you have a card with an 80% CAT (sounds high, but it's more common than you'd think) and you carry a $10,000 MXN debt. After one year, if you don't pay, those $10,000 will have turned into almost $18,000 MXN. Basically, the CAT is the price of your mistake; if you aren't paying in full, the bank takes back all the benefits you thought you gained with cashback or points.

Real Numbers 🤑

Here is a real-life example of my monthly expenses using my current cards without changing a single habit:

• Telecom (Telmex): I pay $725 MXN/month. With the 4% cashback from Santander Like U, I get $29 MXN back.
• Costco Groceries: I spend $2,500 MXN/month. With Costco Citibanamex (2% reward), I get $50 MXN back.
• Other expenses (Dining/Entertainment): Say $1,500 MXN/month. With the 5% cashback from Like U, I get $75 MXN back.

The annual balance: Just by using the right card, I’m getting $154 MXN back per month, totaling $1,848 MXN per year.

Now, let's subtract the costs: the Costco card annual fee is $450 MXN plus VAT ($522 MXN total). At the end of the day, my real net benefit is $1,326 MXN per year.

I didn't have to buy anything I didn't need; I simply used the tools so that my own spending paid for the annual fee. It might not be a fortune, but it's better than zero.

Calculate your real benefit 🧮

Is your current card worth it? I designed this tool so no "fine print" escapes us. To get your real benefit, consider the following:

1. Monthly Cap: This is vital. For example, some cards limit how much cashback you can generate per month or year. If your spending is very high, you might hit the ceiling and stop accumulating.
2. Annual Fee with VAT: In the field below, enter the cost excluding VAT; the calculator will automatically add the 16% so you can see the real impact on your annual benefit.
3. Costco Savings: If you use the Costco card, I included an extra field for that ~2.3% you save by paying the "cash price" at the warehouse. This saving is direct and doesn't count toward the bank's cashback cap.

Did I miss one? If there is a card you'd like me to add to this analysis or if you have ideas to improve the calculator (more categories, specific caps, etc.), let me know. The goal is for this tool to help us all!