Most of us would easily associate credit cards with expenses and spending.
However, there are ways to make some money from them as well.
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And no I am not talking about using stolen credit cards, affiliate programs, reward cards or swipe machines to make money.
I am talking about taking advantage of your own card(s).
It’s not rocket science.
The trick lies in the sort of tactics, which are successfully employed by those credit card companies to cream profit off us, that would inflate rather than deflate our wallet.
It seems that credit card companies are always trying to find new ways to lure people in.
One of the most useful tactics obviously involves the zero interest offer on purchases. How it works is that they basically guarantee you 0% interest with your individual transactions over a fixed period of time.
Nowadays, 30 to 60 days free interest purchases are the norm in the industry. But there are also some credit card providers ready to stretch this commitment across three months, and a few more can settle on even four months or more.
Naturally, people love to take advantage of such generous offers.
The problem is when this stipulated period is up, those grateful credit card holders suddenly find themselves being charged with exorbitant fees!
Given the high-interest rate, the amount to pay to the credit card providers has to be huge, for those who still have a balance by the and of the billing cycle.
So the only way to avoid paying those outrageous fees is to simply settle your balance by the end of the month. To do so, you obviously have to utilize that money from your bank.
Now we are back to square one!
Try Swagbucks, the famous rewards program that pays you for watching videos, taking surveys, shopping and more.
While you are not losing out to the sky-high interest rates, at the same time you do not gain anything at all, at least in the financial perspective.
Making Money from Credit Cards
Let’s now switch our attention to a scenario where it is possible to get the best of both worlds.
Just suppose that you are able to make full use of your credit card without having to revert to your bank account to make the payment, and you can evade those ridiculous interest rates.
This may sound amazing, but it is entirely doable. As you will find out below, there is a way to use your credit cards to create profit rather than debt.
It’s known as credit card arbitrage. And it’s how banks make money.
Here is how it works: You take a free or low-interest loan from a credit card company and deposit that in a high-yield savings account. You then pay the minimum payment required each month and what’s left goes into your pocket. So basically you earn money using the interest rate spread between te money you receive and the money you pay.
There is some amount of risk involved here!
But if you’re a savvy credit card user and prudent on your personal financial management, this strategy could work fabulously!
The key to this strategy is regular spending pattern and a few more simple things that I am going to tell you about.
1. Find Credit Cards with Zero Interest Rate
First and foremost, you need to identify and get those promotional credit cards that come with zero interest rates.
This is elemental in this fast money making strategy.
While you are at that, check out the zero interest duration of the offers from the credit card providers. Obviously, the longer the duration is, the better it is going to be for you, as your chance of making more money is directly proportional to the duration.
If so happen that you can lay your hand onto one such zero interest credit card (for at least a few months) that also comes with zero annual fees, then it is a huge bonus.
Of course, before anything else can proceed, your application for the card has to be approved first. So make sure you keep your credit record decent.
2. Use Your New Card for All Your Shopping
Assuming that you have no problem getting that credit card, what you need to do next is to maximize its use at every opportunity. Convince yourself that this is going to make you some real nice money.
This step involves a change in your spending habit; make a conscious effort to replace cash or even check transactions with credit card payment.
Effectively, pay by credit card whenever you go catch a movie, do your groceries shopping, or top up the gas at petrol kiosk, always flash out your new zero interest credit card when it is practically possible!
3. Settle the Monthly Minimum
Fork out just enough money every month to pay for the bare minimum due.
While I promise this is a moneymaking scheme, you can’t help but have to pay your monthly minimum due so that the 0% interest offer can remain valid.
4. Move the Balance of the Card into a High Yield Savings Account
This step is where the money making idea comes in. Upon clearing the minimum monthly payment (you may also want to take care of other essential purchases as well for the coming month, with your new credit card of course), move the balance of that card into a high yield savings account.
Upon clearing the minimum monthly payment (you may also want to take care of other essential purchases as well for the coming month, with your new credit card of course), move the balance of that card into a high yield savings account.
If you have been prudent, the fund in that saving account is going to balloon (helped by the high yield interest) and you could use it to clear your entire credit card bill with a balance to spare.
This makes practical sense, as you are not going to be slapped with any interest while you roll over your balance to other accounts. With proper planning, some really big bucks can come your way.
5. Pay the Card off and Collect Your Profit!
Keep in mind that you need to put an end to the cycle when the zero interest promotional periods expires. When you come to it, clear off the total credit card bill with your principle funds in your savings account.
When you come to it, clear off the total credit card bill with your principle funds in your savings account.
You don’t need me to tell you that whatever balance in saving account is the net profit you milk from this moneymaking scheme. You don’t do much except waiting for the interests to accumulate. If you know of any other easier way to make money, show me!
As I have promised you right at the start of this article, it is entirely possible to make money when you recognize and reapply the tricks used by credit card companies to make money.
The critical success factor is, of course, finding that credit card with 0% interest rate for an extended period of time.
As a reminder, whether you are successful in getting that 0% interest credit card will be dependent on your credit score. So keep your credit record unblemished if possible for this strategy to work. You can even reapply the same logic to as many consecutive cards as possible in order to maximize your money making chances.
You can even reapply the same logic to as many consecutive cards as possible in order to maximize your money making chances.