I am going to show you how to make money off your credit cards in just three simple steps.
1. Get a cash rewards credit card
2. Charge everything
3. Pay off the credit card
There you have it. The three easy steps to make money off your credit card.
1. Get a cash rewards credit card
With the growing numbers of credit cards that are available to us every day it may be a little bit intimidating to find the right card for you. You can choose from cards that offer airline miles to cash back to points.
I suggest you shop around and see which reward would suit your needs but if you are looking to make money then your best bet would most likely be a cash back card. Even in this area you will have a few choices because some cards give you the cash back instantly as a rebate to your card.
There are some other cards that have a redemption of a certain amount, like $20 or $50 increments.
The third type of cash back reward is in the form of a time withdrawal. This means you have to wait until a certain date to get the reward, usually a one year period and then a check gets sent out to you.
Again, you make the decision on which type of reward you would like to see and then take it from there. My personal favorite is the Chase Freedom Visa because it gives you 1% to 3% of purchases back as a cash reward.
The downside of this is that you can only redeem the reward in increments of $50 at a time. To counter this, Chase is offering a bonus to those of us who can delay gratification and wait to redeem the reward at a later date.
If you wait until you have $200 to redeem then Chase will give you bonus $50 for waiting. This means you can redeem your $200 for $50, essentially making a profit of $50!!
2. Charge everything
In order to make the plan work you have to charge. You have to charge just more than one or two items per week. In fact you have to charge EVERYTHING that you could possibly put on the card.
Every item counts and the more that you use the card the more purchases you will have that count for the 1% to 3% cash back. But just because you charge everything does not mean that you are going to go crazy with the card. This brings us to point number three below.
3. Pay off the credit card
You have to pay off the card IN FULL every month in order to gain the benefits of charging in order to make money. When you pay off the card in full there is no balance being carried over. No balance means no purchases for you to get charged interest on.
So essentially you are making a profit off the use of your card by charging the max and not paying interest on purchases.
A warning: It is very important to read the fine print! I got a “1% cash back” card my first year of college. I used it for small purchases and always paid it off in full each month. A year passed and no cash back appeared. When I called to ask why, I discovered the *cash back only applied to months when I carried a balance!*
Ouch,
That sucks. Chase has been pretty good to me with cash back. Technically it’s not cash back, it’s “cash back rebates”. The beauty is I get them every month. I don’t have to accumulate them then cash them in.
They simply apply it to my balance.
Now if they’d just reduce that ridiculous 23% interest rate.