How to Use Credit Cards to Make Money

Difficulty: Moderately Easy

Instructions

Step 1

Look at using credit cards that offer rewards. This can be a great way to use credit cards to make money. The ideal credit card you want to find will offer cash rewards with no annual fee.

Rewards are usually offered as a percentage of the amount of money you spend. Some reward programs offer a flat percentage based on the amount of your purchases, while others may offer a higher percentage on certain types of purchases. For example, you might find a card that offers 3% back on your gasoline purchases and 1% back on all other purchases.
Step 2

Always choose a credit card with a grace period. Most credit cards have a 20-25 day grace period, meaning if you pay the balance on your credit card before the grace period ends you are not charged any interest.

Some credit cards do not have a grace period. Interest starts accruing from the day you make purchases on your credit card. It is important that you do not use these types of cards. You cannot use these types of credit cards to make money because you will owe too much in interest charges.
Step 3

Try to find a credit card with no annual fee. An annual fee does not make it impossible to make money, but you will need to make sure that the amount of money you can earn is more than the annual fee.
Step 4

Figure out your average spending habits. You can do this by writing down everything you have spent money on in the last 4-6 months. Break this up into categories such as food, gas, rent, clothing, etc. This will help you stay within your budget, figure out what rewards card works best for you and determine what you can charge on your credit card.

Go through your spending habits and figure out all the items you can start charging on your credit card. Some examples of common items are grocery store purchases, telephone bills, cable bills, utility bills, clothing purchases etc. The more items you can charge to your credit card, the more rewards you will earn on your credit card.

Staying within your budget is essential. Some people find it easy to overspend using credit cards because they do not track their spending or they are inclined to make impulse purchases. This can cause you to spend more money than you have and lead to credit card debt. It is important to avoid this if you want to use credit cards to make money.
Step 5

Read all of the terms and conditions with each credit card offer carefully and be on the lookout for any fees or charges that can impact your profit potential. Also be aware of reward limits that credit cards may have. For example, some credit cards limit the amount of money they pay out per year in rewards. One card may limit the amount of rewards you can earn and redeem to $300 a year. Another may have no limits. Pay attention to reward expiration dates as well.

Carefully consider all of these aspects and select a credit card to use that gives you the most rewards based on your spending habits. You may find it necessary to use multiple credit cards to maximize your profits.
Step 6

Start using the rewards credit card you choose. Maximize your earnings by using your card to pay for as many things as you can. Limit your spending only to things you would normally purchase. The idea is not to spend more money, but to use your credit card to earn rewards for money you would have spent anyway.
Step 7

To help keep track of your spending using a credit card, consider keeping a log. You may find it helpful to use a checkbook register for this purpose. You can subtract your credit card purchases from your register just as you would if you were writing checks. Even though you have not really "spent" this money until you pay the credit card bill, it is better to consider the money spent once the purchase is made. This way you can avoid overspending.
Step 8

Always pay your balance in full before your grace period ends. This is an important rule you must follow if you want to use credit cards to make money. It takes determination, organization and careful budgeting to make this work. Paying interest or late fees can quickly eat into any profits you've made and lead to debt.
Step 9

Cash out your rewards according to the rules for the program you are using. Each credit card reward program is different. Many have a minimum reward amount you must accumulate before you can "cash out" or request a payment. Payment methods vary. Some reward programs pay you by check, others will pay you by applying your reward amount as a credit on your credit card statement. Other programs may use other payment methods. Use the most profitable method for receiving payment for your rewards from the program you are using.
Step 10

In addition to the money made from rewards, there are other ways to use credit cards to make money. Consider the following:

It may be obvious that you can take advantage of the delay from the time you charge a purchase to your credit card until the time you have to pay the credit card bill. This grace period gives you time to keep that money in an account or other commodity where you can earn interest. Had you not used the credit card it is likely the funds would have gone directly to pay for your purchase and you would not have had the extra days to earn interest on that money.

You may find an additional ways to take advantage of this concept by using 0% or low interest rate promotional check offers made by your credit card. Some credit card companies will send their users these types of offers periodically. For example, you may receive an offer from your credit card company to use promotional checks that they send you with a 0% interest rate for 2 years. It is sometimes possible to make money from these types of offers. Ideally, you could use one of these checks, write it out to yourself for "X" amount of money and deposit it into a high interest bearing account. You would draw interest on the money for two years, pay off the promotional offer before the deadline and walk away with a nice profit.

Be aware these offers are not as frequent as they once were, and you need to consider all of the fees and rules involved. Many credit cards charge a transaction fee based on the amount the check is written, usually around 3%. This and other terms and conditions that may go along with these offers can often rule out any money making potential, but sometimes it is possible to make a profit. You must carefully review these types of offers and do precise calculations to determine if they are a way for you to use credit cards to make money.
Step 11

Finally, keep in mind that having and using credit cards wisely can be a great way to build a good credit rating, which in return may open up opportunities to get money through loans that you otherwise may not have qualified for. To do this, you must pay off your credit cards faithfully and not carry a balance.

If you can be strict with your spending, stay organized, pay your credit card balance before the due date and use calculations to determine your profit potential, you can use credit cards to make money.