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Make Money Using Credit Cards

February 7, 2009 | Credit Cards | 1 Comment

I never pay with cash unless I have to.  My wife and I use credit cards for practically everything we purchase.  Many of our monthly bills are paid by credit card.  The reason we do this?  To make money!  We don’t pay credit card companies (late fees / finance fees); credit card companies pay us (cash back).

For years I used Discover Card (note: currently offering a $50 cash back bonus to sign up), which paid 1% cash back, and would earn me about $300 per year.  Not a lot of money but hey – it pays a few bills.

When my wife and I were dating long distance I switched to an AirTran Visa card and was able to earn a few free tickets which amounted to about 1% cash back.  Then we got married and stopped flying as much.  I then switched to CapitalOne No Hassle Visa, which offers 2 miles for every dollar of monthly spending above $1,000, and 1 mile per dollar spent on all other purchases.  The cool thing about this card is you can take the rewards as cash, gift card, buy products, or book airline tickets.  I’ve always taken the cash.

Several months ago, I signed up for the Amex Plum Card because they offered 2% cash back if you spend over $5,000 for the month, and 1% cash back if you spend less.   The trick is you have to pay your balance in full within 10 days of the statement closing date to get the discount.  The nice thing is the cash back is credited to your account automatically.  No need to redeem anything.

Unfortunately, the Amex Plum Card has changed the terms for new customers.  New customers get a 1.5% discount on eligible purchases made that month.  Existing customers are “grandfathered” in under the old terms.  The first year annual fee is waived, after it’s a $185 per year.

Another cool thing about the Amex Plum Card is this; if you run into cash flow problems and can’t pay the bill on time, they will allow you to pay at least 10% of the balance and defer payment of the remaining balance without penalty until the closing date of your next bill cycle.  I never plan on using this because I want the cash back, so I pay on time.

If you want 2% cash back no matter how much you spend each month, there’s good news.  The Schwab Bank Invest First Visa Signature and the Fidelity Rewards American Express credit cards give you unlimited 2% cash back on purchases, automatically deposited into a brokerage account each month.  There’s no limit on the cash back you can earn, no minimum monthly purchase amount, and there are no annual fees.  That’s a great deal and I’m considering signing up!

WARNING! In order for you to make money using credit cards, you must pay off the entire bill and never be late.  If you don’t pay off the bill in full, or if you are late paying, you will incur finance and late fees.  The idea here is to not pay the credit card company any money; you want them to pay you!  So if you are an impulsive shopper with a credit card and you can’t control yourself, pay cash.

Below is what my wife and I earned last year by using our cash back credit cards for personal and business expenses (Amex Plum Card and CapitalOne):

Cash Back Earning in 2008

CapitalOne = $425
Amex Plum Card = $1,111
Late Fees = $0
Finance Fees = $0
Total = $1,536

 

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One Comment to “Make Money Using Credit Cards”

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    1:13 pm on July 19th, 2015

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