How To Make Money Using Credit Cards

Written by , December 1, 2010

Even if you don’t know the exact numbers off the top of your head, you probably know that paying interest and fees to your credit card companies can really add up. We practically accept it as a fact of life that we’re going to have to pay something for the convenience of our credit cards. But did you know that if you manage your account properly, you can actually make money from your credit cards?

The concepts behind making money from your credit cards are quite straightforward. You need to minimize the expenses you pay, and at the same time take advantage of the best possible credit card reward programs you can.

Here is some advice on how to make money using your credit cards.

  • Pay your bill on time. The first step in minimizing your fees is to make sure that you pay your credit card bill on time each and every month. The fees for making a single late payment can be quite high, even if you’re only late by a day or two. In addition, the credit card company can use the late payment as a reason raise your interest rates for charges you’ll make in the future.
  • Balance transfers. In addition, some people have been able to save significant amounts of money by engaging in a type of credit card “musical chairs.” Credit card companies will often entice new customers to sign up for an account by offering them the option of transferring their existing balances to the new account and not be charged any interest for a certain amount of time (often at least six months or a year). For individuals who carry large balances on high interest credit cards, taking advantage of this option can often save them hundreds of dollars a year.
  • Rewards programs. Beyond simply reducing your fees, you can take the next step and actually make money by finding a credit card that has a lucrative rewards program. The first step in analyzing the different reward program options is to take a look back to see how much you’ve charged on your own cards in the last year. Some rewards programs are better suited to larger purchasing volumes, so tailor your search to your past habits.
    • – Once you’ve decided upon a particular credit card company’s rewards program, there are few steps you should follow to maximize the benefit you receive. First, avoid paying any money into the program. If you need additional points or credits in order to redeem for a particular reward, some programs permit you to buy them for cash.
      – Unless it’s absolutely essential that you redeem for that reward immediately, it almost always makes sense just to wait until you accrue enough credits through your normal activity. By this same measure, don’t pay for the privilege of using a rewards program unless that program can offer you something distinctive that you can’t find in a no-charge rewards program.

    Remember, you want to put yourself into a position where you can make money from your credit cards, not put more money into them. You can use credit cards to your advantage.

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