Leveraging Credit to Make Money

Credit accounts, but mostly credit cards, can help or hurt you. For most Americans they believe it hurts them, and for many that is true. The method I will discuss today has probably been discussed before. I am going to try to give the most complete and accurate view of 3 main strategies for how to make this tactic sucessful and what you need to be able to use this strategy.

First of all, what am I talking about when I say leveraging.

When I say leveraging I mean milking ever penny you can get out of a credit card (CC) company because it is so easy compared to Rakuten and loyalty programs. The way to get every penny is variable so I am making this guide in a way to help you determine what is best for your situation. Additionally when I say pennies, I basically mean cash back/points/miles or whatever else applies to you.

Pick The Right Card

You probably already have a credit card, and you can start doing leverageing with that one, but I would like you to consider you might be able to do MORE leveraging with another card. The right card is subjective - it depends heavily on who you are, how you spend, and what you want back. Personally, I like my Citi Double Cash card, I get 2% cash back on everything I purchase. I chose it because I spend money everywhere and not a ton at a a single store like Amazon or a gas station. I also have an Amazon business card because I get 5% back on Amazon. What card is best for you can be determined with logic or math, but what may also be best is to have multiple cards. At a minimum I would reccomend having a high cash back on everything card and a high cash back at a store card.

PS: I don't reccomend airline cards unless you fly a lot because they usually have an annual fee and you can only use the points for one thing: FLYING

Throw Your Debit Card Away

My mom hates having to pay a large credit card bill with everything she spent in the month, I understand that, and this is not a method I would use if you have trouble with making enough each month to cover your expenses. If thats you, avoid credit cards as much as possible.

That being said, most retailers, restaurants, etc, don't charge a fee for using cards... so if you get 2% back on your purchases and you have up to 30 days to pay for them (meaning your money could be sitting in the bank collecting interest that whole month) you end up with 2% more wealth each month.

What does 2% mean?

If you spend $1000 a month, you've just earned yourself $20 in extra money...

each...

month.

If you don't know how to calculate this:

Check your last months spending ($) and multiply it by .02 (2%), then times 100. 1,000 x 0.02 x 100 = $20

Pay It Off

Pay your credit card bill off each month so you don't pay any interest (also avoid cards with annual fees). This means the card company is paying you to borrow their money for a month. This is also why I say... if you can't pay your bills each month don't do this, or at least don't spend more than what you know you can pay. Credit card interest is insanely high and some of the hardest debt to get out of.

Have Some Self Control

Credit cards require some self control which is another reason I would say this is not for everyone. To make this work in your favor, you have to be able to cover the bill each month. That probably means that you should also have a basic grasp on personal finance such as budgeting and keeping 3-6 months of savings in the bank in case you get fired or laid off.

I love writing and teaching about personal finance topics like this and I would be happy to elaborate for anyone, or write other articles on the basics (and beyond) of personal finance. If you have interest in any of this please reach out!