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How To Make Money Off Your Credit Card
By Amy Trejo
In this current economy, many people are looking for non traditional ways to make and avoid spending, or at least get rewarded for the spending that you need to do. This makes cash back credit cards quite appealing for some. Although you can't make a great deal of with your cash back credit card, you can make enough to cover your interest, making credit something far easier to manage. So how do you make from your credit card, you ask? The answer is a simple 5 step process:
1. Step 1: Finding The Right Cash Back Credit Card - The first step in making off of your credit card is to actually get one. If you have one already, you'll want to check the benefits associated and make sure that the restrictions for your "cash back perk" are loose. If they are not, contact your credit card company and ask them if there's any chance to improve your benefits package. If you don't have a cash back credit card yet, then it's best to choose a card that provides more than 1% cash back on purchases that fit your lifestyle.
2. Step 2: Earn Interest On Your Credit Card Payments - If a credit card company can earn interest on your spending, why can't you earn interest on the you will spend paying them back? Earning interest is as simple as opening a high yield savings account. Look for something above a 2% APR on every dollar you save. Consider something like an ING Orange Savings Account, for instance, which is free and easy to use.
3. Step 3: Budget Your Monthly Spending And Place The in Your Savings - Consider how much you will spend each month on expenses like groceries, gas, and other bills. Basically, any expense that gets you a
cash back bonus, is an expense that you should incorporate into this budget. Now, put the cash that you would normally spend on these purchases into your new bank account and let it start to grow with your high interest savings.
4. Step 4: Spend Responsibly - Now that you have a budget that you know you can cover and your is in savings, you can use your credit card to make those purchases, without worrying about the upcoming bill. While you're spending with your card, you are earning cash back bonuses, and the cash you have sitting in savings, is just growing with interest.
5. Step 5: Start Making - Pay your balance in full every month, and you'll get the most out of your cash back card. With the already put aside, paying your credit card bills should be simple, but it gets better. As you continue to earn cash back, you can continue to put extra into your high yield savings account! Put your cash back bonuses to work by placing them into this account and at the end of the year, you'll have your cash back AND the interest earned! Provided you made timely payments, this should be equal to, if not above the interest charged to all your purchases.
Following this process takes some discipline, but it also provides some spare cash for your wallet, and ensures that you pay off your card every month, provided you follow your budget. If you go over budget one month, don't give up. Sometimes getting into this habit can take a few tries, but when you do get through an entire year following steps 1 through 5, you will find that the credit card company isn't making off of you, instead you're making off of them.
The Student Credit Cards Center provides guidance and advice on a student's first credit card. When searching for your first student card, take time to learn about the pros and cons of credit, credit scores, and debt management from this and many reputable sites.
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