As a cardholder, you must have wondered how to make money using credit cards? Yes you can make money by using credit cards. Let’s know how?
Credit card companies are treated as evil by many people. But in today’s fast paced world, credit cards have become a convenient way to pay for goods and services. If you use credit cards wisely, they can become a powerful tool to boost your financial condition and even help to make some extra money.
In this blog post, we will discover some inventive strategies on how to use credit cards to make money, ensuring that you get all the benefits of a credit card without falling into debt.
Before heading towards our main topic, first we will understand how credit cards work?
Understand How Do Credit Cards Work?
Credit cards are a type of financial tool that allows individuals to borrow money from a lender, typically a bank or a financial institution. A credit card can be used to make purchases at different merchants that accept cards. You’ll need to pay back the borrowed money with interest rate and charges in a certain period of time.
Here's an overview of how credit cards work:
1. You apply for a credit card through card issuer banks or other financial institutions. The issuer reviews your credit history, income, and other factors.
2. If the application is approved, you’re given a credit card with a specific credit limit, which you can use to make purchases.
3. The card is delivered by mail to your address. You have to activate your card before use.
4. Now, you can use the card to make purchases at merchants that accept cards.
5. Each transaction is recorded and the card network sends the information of each transaction to the issuer of your credit card.
6. The cardholder receives a monthly statement, which includes your balance, interest charges, and minimum payment due.
7. Many credit cards offer rewards and cash back on purchases.
8. Cardholders have a grace period which is usually around 21-25 days. You must pay your balance within the grace period to avoid charges.
9. Credit cards have variable rates and charges. The interest rates can be high as compared to other forms of borrowing.
10. Responsible use of credit cards and on-time payments improves your credit score with time. You can check your free credit report from Experian, Equifax, or Transunion.
How to Use Credit Cards to Make Money in 2024
The responsible use of credit cards is the key point to turn credit cards into a money making machine. In this full guide, we will discuss the safe and effective ways to make money from credit cards without falling into debt traps.
1. Choose the Right Credit Card (Low to no annual Fee Cards)
The first and the most important step to make money from a credit card is selecting the perfect credit card for your needs. Consider credit cards that offer cash back, rewards, travel benefits or other perks that match your needs and lifestyle.
Try to get a low annual fee credit card, most preferably $0 annual fee cards. Many card issuers offer a no annual fee card, meaning you won’t have to do anything for the benefits and perks. However, you can’t go away from other fees and charges. Avoid carrying a balance.
To make profit from a credit card, make purchases and claim any bonuses, rewards, cashback, or any other eligible perks.
2. Stoozing - Earn Money Using Your 0% Cards
Stoozing involves treating a 0% interest credit card to borrow money, which is then placed into interest free loans or high interest savings accounts. When the 0% intro APR period ends, the borrowed money is paid back and the interest earned on account is left as the profit. You can also earn money from balance transfer credit cards. But keep in mind, they charge a fee of around 3% or more.
Making money from Stoozing is simple and easy. Simply, look for a savings account that yields the highest interest rate. Make more and more purchases that you can afford on your card.
Now, deposit the cash into a high interest account. After the 0% interest period expires, the interest you earned is your profit.
3. Earn Free Money From Welcome Bonus
Many credit cards provide new cardholders welcome bonuses. The welcome bonus can be in the form of bonus points, miles or cashback. This is free money for new card members. Welcome bonuses can vary from card to cards. For eg. you may get a welcome bonus if you spend $500 on eligible purchases within a specific period of time. Check your card’s issuer website to know the duration.
Claim your welcome bonus, if it’s not applied automatically.
4. Earn Money Back With Rewards and Cash Back Cards
To make money using credit cards, look for a card that offers rewards or cash back when you shop. Generally, the best credit card for everyday expenses or best cash-back credit cards are great for earning rewards.
Many credit cards allow you to earn up to 5% cash back on various categories, like Blue Cash Preferred® Card from American Express earn your 6% cash back on grocery spends, and Chase Sapphire Preferred Card earn 5X points on flight purchases through Chase Ultimate Rewards.
The more you use a cash back credit card, the more money you earn in the form of discounts or cash back.
5. Explore Referral and Affiliate Programs
Many card issuers offer referral or affiliate programs, they partner with online retailers to provide cardholders additional cash back through their shopping portals or their mobile apps. You can join referral programs and recommend your favourite credit card to your friends and family. If they get approved, you both get reward points, miles or statement credits.
Can I Use Credit Cards to Make Money?
Yes, you can make money from credit credit from reward programs, cash back, welcome bonus, or stoozing, etc. But it’s a complicated process. Kindly, choose a card that matches your needs and lifestyle.
Suppose, a card is charging a fee for reward, bonuses, or other perks, look carefully at the charges and other details.Will you be able to use those benefits to fulfil your requirements to claim those rewards.
You should use a calculator to find the actual number of profits. And, don’t apply for a card until you’re sure it’s the right one for you.
Making money using credit cards demands a planned strategy, combination of thoughts with financial responsibility. By choosing the right credit card and following the discussed strategies,, you can make money by using credit cards.
You can turn your credit card into a money making machine, if you use your credit card wisely. Remember, pay off all your due balances in full each month to avoid extra charges and debt trap.
Follow the above strategies and you’ll see that credit cards are more than just a piece of plastic - they can be turned into a great financial and money making tool.