Wednesday, June 27, 2012

Using Credit Cards To Make Money

Catchy title, huh?  And I know you're looking at your screen thinking she's fell off her rocker.  Amy, I thought you didn't like credit cards.  Ahhhh, but I never said I didn't like credit cards.  I do find them tricky and misleading at times.  But if you know what you're doing and are in total control of your money you can actually make money with them.  Will it get you rich?  Not so much.

I'm going to start out with the "This is how we do it" speech.  No, not the song.  Before I tell you how to do something I always tell you how we do it.  I don't always do or explain things the "proper" way.  I am sure there are plenty of other "proper" or more detailed explanations on how to do it.  But like I said I'm more of a fly by the seat of my pants girl.

Ok, step one.  If you're going to get a credit card get one that offers rewards.  We have two that we use.  Discover and Chase Freedom.  They both offer a percentage on all your purchases and 5% cash back bonus on certain offers each period.  There are tons more out there, but these are the only two I'm familiar with.

Let's start with our Discover Card.  During certain periods of the year they set up 5% cashback for spending on certain things.  In July and September you can earn 5% on Gas and Summer Fun which inlcudes going to the movies and theme parks.  I want to take my kids to see the movie Brave so I'm waiting until after July 1st to take them so that I'll get the 5% back.  (I'll also earn points for Disney Movie Rewards.)  October thru December they're offering 5% on holiday shopping.  Now, you must sign up to earn these rewards, but they make it super easy.  All you have to do is log into your account and click the corresponding button under the Cashback Bonus tab.  Easy peasy.
You can also earn percentages while shopping online thru the Discover Card website and using your card.  My fave right now is getting 5% back at  Ebates is only offering 3%.
When redeeming your rewards you can choose from one of their gift cards which they offer a discount on.  For instance, you can get a $25 Staples Gift Card for only $20 in rewards cash - saving you some money.  They even offer bigger discounts for the larger ticket items like you can get $40 to spend at Alamo Rent a Car for only $20 in rewards cash.  Other options include charitable donations, Discover Gift Cards, merchandise or even use your credits towards purchases. Personally, we prefer to use the Statement Credit option.  You don't get a discount, but you can put your cashback directly to paying off your account.  You must have at least $50 in rewards cash to do this.

The Chase Freedom card works similarly.  You earn 1% on all your purchases no matter how big or small and with no limit.  Earn 5% cash back on up to $1,500 spent in bonus categories each quarter. They have new categories every three months like gas stations, grocery stores, and even restaurants.
It's free and easy to activate your bonus each quarter.  And like the Discover Card you must activate your bonus rewards each quarter.  Just log into your account and opt in.  Like with Discover we choose to use the statement credit most often.  You can also choose to have a check mailed to you or use your rewards for gift cards.  Unlike Discover, Chase doesn't offer a discount on gift cards.  1,000 points equals $10.  Chase also offers the option to put your points towards booking a trip or choosing a special "experience." Experiences include activities like Scuba Diving or Stock Car Racing.  You know, stuff you don't do everyday.  Right now, Chase Freedom is also offering $100 cash back to new customers if you purchase $500 on your card in three months.

Whatever card you choose you HAVE to follow one simple rule for this whole "money making" thing to work.  You MUST pay off your entire balance each month.  Otherwise you'll be paying interest and not making money at all and falling in debt.  So make sure you only spend what you can pay for in a month's time.  You'll have to stick to your budget strictly.  But if you do that you can earn a little extra money each month. 

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