When I was $21,427 in credit card debt, I thought credit cards were evil - so I cut up each and every single one, vowing never to use them again.
That was then and this is now. My opinion on credit cards has definitely changed.
Now, I use credit cards to make money, they don’t use me.
How do credit cards make money?
People oftentimes treat credit card purchases like free money, rather than what they really are: a short-term interest-free loan.
This means you can make a purchase (even if you're broke) and you don't have to pay it back until the next month.
While this sounds nice, credit card companies do this to take advantage of you.
Because, what happens of course? When it’s time to pay your credit card bill, you just don’t have enough to pay it in full.
So, the people who can’t pay their bill, now have to pay interest on top of what they already owe.
That “nice” credit card company isn’t so nice after all, is it? Never forget they are a business that has one goal: to get you to overspend and get into debt.
This is exactly how credit cards make money.
So why don't we turn the tables and start taking advantage of credit cards?
Let me go over some credit card hacks you can use to make money with your credit card.
Free tools to help with credit card payments
First things first. If your spending is out of control, you need to fix that first. No amount of credit card hacks are ever going to get you out of debt if you continue spending like a madman!
There are some tools (totally free) that can help you take back control. Here are my favorite ones:
What is Billshark, you ask?
Billshark is a free service that will negotiate your bills on your behalf and get you a discount. That's all there is to it!
They make money by keeping a percentage of what you get reduced, but you don't pay them a red cent.
Give them a shot and get a discount on your cell phone, internet, cable bill, and more. They claim to have a 90% success rate - and there's zero risk to try it.
See how Billshark works here.
Credit card here, credit card there, credit cards everywhere!
Tally simplifies your finances by collecting your credit card payments into one lower monthly payment. They do this by extending you a credit line at a lower interest rate.
Doing this can drastically cut down the time (and money) to help you get rid of your debt faster.
In short, this is the smart way to pay off your credit card debt.
See how much you can save with Tally here.
When you use your credit cards responsibly, it can save you lots of cash.
The rewards come in the form of lower interest rates on a car loan and a home loan. We're talking thousands of dollars in savings just by using credit cards!
Use the free Credit Karma app to track your credit score and make sure there aren't any errors in your credit report. Just fixing one mistake can boost your credit score and save you big money.
Trim is a financial assistant with one goal: to save you money. It's not a real person, but rather an artificial intelligence bot you can text or send a message in Facebook Messenger.
Here's how Trim works and what Trim does (for free, of course).
You link your bank accounts and credit cards first. Afterward, Trim actively looks for ways to reduce your monthly expenses.
They will cancel unwanted subscriptions, negotiate your bills, defer and reduce credit card payments, and negotiate lower interest rates (APRs) on your behalf.
Truebill optimizes your spending habits to help you meet your financial goals. Once you sign up (it's free), you can add your accounts and get a snapshot of what your financial life looks like.
You can see where you're spending to see where changes need to be made. While you do that, they'll work on canceling unwanted subscriptions and lowering your monthly recurring bills.
In addition to using apps and tools to lower your credit card payments, you can (and should) take advantage of some awesome perks credit cards give us.
You just need to know where to look, but there are many ways you can make money with a credit card.
Here are a few of them.
Rewards on all purchases
By far my favorite way to make money with a credit card is by taking advantage of a rewards program.
Here are the rewards on some of the credit cards I use:
The end result is about $100 every month in rewards, just for paying with a credit card.
0% rate on expenses for 12 months
Many credit cards will lure you in with attractive introductory offers. One such offer is not charging interest on purchases the first year.
This type of offer is useful if you have other debt you want to pay off first. You could put all of your expenses on this new credit card, make only the minimum payment, and use the rest of your income to pay off high interest debt.
This is ideal for the debt avalanche method, letting you laser focus on high-interest debt first.
Never forget though that this new debt will accumulate and you'll begin paying interest in one year. So the clock would be ticking for you to get your financial house in order.
0% balance transfer for 18 months
If you already have a credit card balance and are paying interest every month - you're doing it wrong.
You are wasting money paying interest fees. There is another way out.
Enter the balance transfer credit card.
There's a few credit cards that offer very attractive balance transfer offers.
The way it works is you sign up and you get to transfer your existing high interest debt at a 0% introductory rate for anywhere from 12 to 21 months.
The downside is paying a fee, which is anywhere from 2-5% of the total being transferred.
Here's an example of how much you can save with this method, using data from this debt repayment calculator:
On a debt of $10,000 with a balance transfer fee of 2% you would pay $200 to delay your debt for 18 months.
By comparison, had you instead made payments for 18 months on a card with a 21.99% interest rate, you'd be out $1,661 in interest fees alone.
Take advantage of teaser offers
Credit card sign-up bonuses are extremely common.
Many credit cards have sweet bonuses if you cross certain spending thresholds, too.
This is no excuse to overspend. It is, however, an excuse to switch your auto-pay bills to that card to reach their milestones.
Make sure the offer is good enough to waste your time trying to reach it.
And you also don't want any card to have an annual fee. I don't care how good the offer is, it's not worth paying a fee every year.
Have you ever gone to the store, bought something expensive that couldn’t be returned, only to see the same thing in another store for a significantly lower price?
For most things it’s just a few bucks so it’s not that big of a deal. But what if you spent $2,750 on an Panasonic HDTV and then a week later the price drops to $2,499? That’s gonna sting.
We all have, and we’ve all kicked ourselves in the backside for losing out on the deal.
You could go back to the retailer and tell them your plight and they make take pity upon you and refund the difference. Yeah, keep dreaming.
Luckily, some credit cards offer protection that meets the difference if we accidentally overpay.
Price protection through a credit card offers a reimbursement for the difference in price depending on how long between the purchase and the price drop.
Here are the price protection benefits offered by the Chase Sapphire card.
The downside here, if any, is that these price protection programs require you the consumer to be vigilant about watching for price drops after your purchase.
You know as well as I do, we never do this.
This probably explains why the credit card companies offer this. It’s a great way to promote the benefits of using their credit card and they don’t lose much since few people take advantage of the service.
There’s a lot of fine print and rules that come with this protection, so before you start carelessly buying anything at any store, contact your credit card provider and make sure you understand the extent of which you are protected.
Additional discounts on select retailers
Most credit cards give additional discounts to consumers when they shop at brands they partner with.
I know CapitalOne and Chase have new offers updating every month. These offers change all the time and may require you to select the offer to qualify for the discount first.
It's important to keep in mind though that the reason credit cards offer this is to get you to overspend.
Only take advantage of these offers if you were already planning to make a purchase.
You may get additional warranty protection on eligible items that are purchased with your credit card.
Typically, most products you purchase come with a one year warranty offered by the manufacturer. The store you bought it at, such as Best Buy, may offer you a costly extended warranty plan.
But if you made this purchase with a credit card, you may already have extended your warranty by an additional year at no cost to you.
American Express is one of the most popular cards for value-added extended warranties on major purchases (see terms here), though many others offer this perk too. Check with your credit card to see if they offer this valuable perk.
If you’ve ever tried to return an item only to have your request denied, you may have wished you knew about the refund protection your credit card offers.
Refund protection is commonly used when you’ve missed the 7 day or 30 day refund window, but haven’t yet opened the item.
The protection allows the card issuer to reimburse you the purchase price of the item for an extended period after the purchase. Sometimes this is as much as 90 days later
Here are the refund protection terms for AMEX cardholders.
Your credit card company will require you to ship the item to them first and they’ll issue you a refund after they receive it.
Yes, it’s a hassle, but it’s much better than being stuck with an impulsively purchased item that you no longer want.
Buying a new and expensive gadget like an iPad Pro can bring you a feeling of joy, but that happiness will soon be squashed if you smash it or it gets stolen before you get the chance to really enjoy it.
But if you bought it with your credit card you may have built-in insurance and be eligible for a full reimbursement of the cost of the product.
The credit card companies aren’t going to give you anything without you jumping through hoops though. So keep in mind there’s a time frame you need to be in to qualify, you’ll need the receipt and if it’s stolen you may need a police report too.
As with many things in life, the devil’s in the details. Read the fine print to see which of these purchase protection perks your credit card offers. If you want a quicker answer, you can google the name of your card or just call the number on the back and ask them yourself.
Get automatic insurance for a covered loss when you purchase the entire fare with your credit card.
This is a really convenient feature to know about, especially if you’re about to book an expensive vacation or you’re a frequent traveler.
Many of us know that when it comes to last-minute changes, most hotels and airlines charge a fee - that’s if they’ll allow you to cancel at all. With insurance, this takes lots of stress off your shoulders when making vacation plans.
If you need a jump start, a tire change, or towing, your credit card may offer complimentary roadside assistance.
Car Rental Insurance
When you rent an eligible vehicle with your credit card, you can be covered for damage due to collision or theft.
Hotel Room Insurance
This is not only a perk not many people know they have, but it’s one no one ever thinks to ask about.
Some credit card companies offer their users hotel room insurance when they book their room using their credit card. This means if their room gets broken into and something is stolen, the cost of those items are covered up to a certain amount.
Avoid fraud entirely
What type of protection do you get with your debit card or your bank account? Not much. If the money is gone, odds are it is gone.
But most credit cards offer protection in case your card is lost or stolen.
If you use your credit card to make all of your purchases, you are effectively eliminating ever being held liable for fraud.
Free credit score and monitoring
You don't have to pay to see your credit score anymore. With just a credit card you most likely will get access to see your credit report and credit score.
This tool is useful, as it shows you how your score changes over time.
Furthermore, when a new account is opened you are notified right away so you can identify a case of identity theft early on.
Some credit cards, like my American Express Blue Cash Everyday card, lets you buy concert tickets before they open to the public.
Many credit card companies offer pre-sale tickets or a subscription to sports seasons through their card. These offers are usually sweetened by allowing users to apply any cashback credits they’ve earned towards the overall cost of what they’re buying.
If there’s a huge concert coming up this feature is often a huge perk, especially when the event is one of the hottest of the year. Keep your eye out for what’s being offered, and don’t forget to ask what deals they’re applying to the tickets.
Credit cards offer the ability to buy tickets to concerts and sports events. While this is a convenience and often saves us a lot of time, there’s another perk that’s even better than that.
Most credit cards offer preferred seating, which is a huge perk if you care about where you are during your events. Not only are seats reserved for you, but oftentimes you can only get those seats through really specific means - credit card companies being one.
For avid fans, this perk alone may be worth having a card for.
To turn this into a money-making hack, you can sell your tickets on eBay.
Ditch the budgeting software
Put all of your expenses on one credit card and ditch the expensive budgeting software.
If you put everything on a credit card, you can see an itemized list of your expenses every month.
This eliminates the need to input any data anywhere or pay for software to give you a report.
You can set up your credit card to alert you when your balance is too high, your payment is due or a large expense just went through.
In short, it does most of what a budgeting app would do.
And at the end of the year, you get a full report showing you where your money went that year.
Wrapping it up
The bottom line is this. Use credit cards responsibly and you can make a lot of money with them.
Use them irresponsibly and they will make a lot of money off of you.
If this post helped you make money with your credit cards, please consider sharing it!