Credit Cards

When most people think of credit cards they think of high interest rates, annual fees, and lots of expenses. What if I told you that you can actually earn money with a credit card? Would you believe me?

What I am about to tell you was originally told to me about 9 years ago by a woman on the phone who was trying to convince me to accept her offer of an American Express card. I declined her offer as I didn’t think I needed a credit card at the time and the annual fee for an American Express card is very high.

But what she said got me thinking, so I ended up getting a VISA card from my bank. The way I use my credit card doesn’t cost me any money and I actually get money back once a year.

I know it sounds too good to be true, but I have been using my credit card this way for 7 years and it actually makes me money. The reason I can make money is that my bank offers cashback on all my credit card purchases. Once a year I receive 1% of my annual spending back on my VISA card.

So now I put all my purchases (well, almost all as some places like McDonalds don’t take credit cards) on my VISA card. I then pay off the outstanding balance each month when it is due, thus avoiding the finance charge.

How can I do this? It’s simple. I keep all my income in my bank account and by the time the monthly credit card bill is due I have enough money to pay it. Of course there is still money owing on the card but it isn’t due until the following month.

In fact I have up to 2 months to pay for some of my purchases. How is that possible? Well, the items I put on my VISA at the beginning of the month go on the bill I receive the following month which isn’t due until the end of that month.

For example, if I buy something on March 3rd on my VISA it will appear on the bill I receive the following month which is due at the end of April. Therefore I don’t have to take any money out of my bank account until nearly two months after I made my purchase! So during those two months my money sits in my bank account earning me interest.

Of course this only works if you are good at budgeting. Some people go crazy when they get a credit card and buy lots of things they don’t really need. I never go over or even close to my credit limit. I stay well within my monthly budget, which I worked out long before I had a credit card.

Occasionally I indulge and buy something I haven’t budgeted for, but I make sure I have enough money (or will have) to pay for it when the bill is due. You have to have good self control to use your credit card to your advantage. It’s also helpful for those unexpected expenses, like car repairs, which you haven’t budgeted for.

I have my VISA through the National Bank which offers cashback on the credit card. Some other cards have similar schemes or offer points which can be redeemed for gifts, prizes or discounts. In fact, VISA and MasterCard quite often have competitions which you are entered into automatically each time you use your card.

Since I receive cashback on my purchases I make it a point to put everything I can on my credit card. On average I get about $160 back each year which more than covers the $25 annual fee. I also have an instant record of all my spending so I can keep track of my budget.

I’ve even setup monthly payments for certain companies to go directly to my VISA which saves me the hassle and expense of writing and posting a cheque. My life insurance, electric bill, and magazine subscriptions are a few examples.

It may sound amazing, but I am sure I’m not the only one taking full advantage of my credit card. Using and paying off my VISA regularly creates good credit which is always useful when you need to get a loan for something big like a new car or a house.

So now do you believe me when I say you can earn money using your credit card?