10 Secrets to save and earn money with your credit card
Making money with credit cards might seem adumbration, but it is, in fact, possible. The procedure is known as arbitrage. The process involves using low-interest or zero-interest credit card advances to invest in high-yield savings accounts. More savvy investors use advances to invest in high-risk bonds and stocks. You can make money with arbitrage, but it is a dangerous investment strategy. Sure, swiping your card everywhere you go will not get you rich faster. But when you utilize your credit cards strategically, you can generate some cash for payments. Or, in case you are debt-free, you can use the extra funds to pay for an upcoming trip or that flat-screen TV you have always wanted. Below are creative ways you can make money with your credit cards.
Make money with cashback credit cards
To create wealth using credit cards, get a card that pays you to shop. This kind of card is known as a cashback credit card. Based on the type of card you get, you earn one percent or even five percent in cash back rewards for individual purchases. For example, consider the Discover it card. Using a cashback credit card, you can earn five percent cashback in rotating categories- like restaurants, gas, and more- on up to $1,500 in purchases each quarter. So in case, you spend $1,500 on qualifying purchases- that is $75 right back into your pocket. And in addition to five percent cashback, you get one percent unlimited cash back on all other purchases.
This card also comes with a rare perk: Discover matches dollar-for-dollar all of the cashback you take home in your first year, which can add up faster. The more you use a cash back credit card, the more cash you can take home. Although you need to be cautious. Pay off your credit card balance in total monthly to avoid racking up credit card debt and paying high-interest charges. In case you fall too deep into debt, the cashback rewards may not be worth it.
Transfer balances to reduce your interest rate
In case you are currently carrying a balance on a credit card with a high-interest rate, you will be able to save hundreds of dollars by shifting that balance to a credit card with a more low-interest rate. Making excessive use of a zero percent APR balance transfer reward will save you even more money as you can avert paying interest for up to twenty-one months based on the credit card you select. For instance, you can save almost $400 by moving a $3,000 balance at seventeen percent to a credit card with zero percent APR for one year, in case you can pay $251 monthly.
Use zero percent purchase APR for big purchases
In the past, zero percent introductory rates were provided only with balance transfers. Now, quite a few credit cards offer zero percent introductory APR on purchases as well. In case you have a big-ticket item to purchase- a medical procedure, new furniture, or a vacation- using a credit card with a zero percent APR will allow you to break up the purchase in several payments without having to pay interest.
Sign up bonuses
In case you have a high credit score, you can frequently qualify for a signup bonus of about $250 or more when you take advantage of the best credit card offers today. Capital One® Venture® Rewards Credit Card is an example of such a card, which provides a bonus of 50,000 miles after spending $3,000 in the first three months, which is equivalent to $500 in travel rewards.
Some credit cards come with redeemable points, plain cash, miles, by just signing up. These signup bonuses are like free cash. Rewards will vary based on the kind of credit card you select, and frequently, the ones with the best signup bonuses have the highest annual fees. Typically, credit cards like these come with a rewards program that offset that fee in case you use it enough. But ensure you are not just looking at the signup bonus, consider how and when you will use the credit card.
Invest your cashback
You can also put cash back rewards to work for you and invest the money even though you earn less than a few hundred dollars. As a result of the power of compounding interest, your cashback rewards will grow massively over time. For example, if you earn $300 in cashback annually and invest that $300 into an account that earns seven percent interest annually, in ten years, your balance will increase to more than $4,000.
An added credit card benefit is that some rewards credit cards allow card owners to link their cards to eligible investment accounts. For example, the Fidelity Rewards Visa Signature credit card: You can earn unlimited two percent cash and have those rewards instantly deposited into an eligible Fidelity account, like a brokerage account, a 529 college savings program, a retirement account and more. To enhance your investment earnings, look for credit cards without restrictive categories. The more limitations, the fewer opportunities to cash in and invest your rewards.
Sell your rewards points-but be careful
Travel rewards credit cards are a great reward if you are a frequent traveler. But what if you do not travel often? You can sell your points for money by booking tickets for family and friends with points in exchange for cash.
Well, this is a win-win case for both parties. Your friends receive a discounted ticket, and you get cash back at a higher rate than your bank can offer. However, before you start to get too excited, and begin selling your unwanted rewards for money, know the threats. Even though some rewards programs allow members to gift rewards or points to their friends and family, selling these perks for cash may violate the terms and conditions of some programs. Thus before you sell, carefully read your credit card rewards’ conditions and terms thoroughly and ensure the procedure is not illegal in your state.
Redeem your cash for a gift card
Whereas money might be the more versatile reward, you can increase your rewards in case you redeem them for a gift with the credit card issuer’s rewards partners. For instance, you can redeem $20 in cash rewards for a $25 gift card.
Use your credit card issuer’s discounted mall
It takes planning strategy, but you can save money on movies, dining, tickets, flowers, and more by purchasing your credit card issuer’s discounted mall. Evaluate your credit card issuer’s online discounted mall to see which retailers provide discounts.
Extended warranty benefits
You want to buy an extended warranty on costly electronics, but spending extra money is not an attractive alternative. In case you use the right credit card, you can automatically get an extended warranty and save that cash. Evaluate your credit cards before you shop to understand whether any of your cards have extended warranty coverage. And also what you have to do to take advantage of the benefit. Keep your purchase receipt for the period of the warranty so you can easily submit a claim in the event of product failure.
Get creative with expired credit cards
You cannot purchase with an expired credit card- but you can turn the card into art and cash in. This is possibly a foreign concept, but some DIY-ers are exploring their crafty side and making handmade jewelry using expired credit cards. The profit you can accumulate from selling these unique fashion pieces vary. But in case you are interested, there are credit card accessories on Etsy.com selling for as high as $20 and as low as $5. Since the credit cards are chopped into tiny pieces, the chances of someone putting the pieces of the card together and getting their hands on your card number is unlikely. Yet, it is safer to err on the side of caution. Do not use too many pieces of the same credit card as one piece of jewelry.
