Making Money with a Rewards Credit Card

Can Rewards From Credit Card Companies be Worth the Cost?

May 12, 2009

Using Credit Cards wisely includes maximizing the rewards while minimizing the costs.

Did you know that you can actually make money with the help of a rewards credit card? While many financial experts recommend doing away with credit cards completely, a wisely-used credit card can be a very useful financial tool. In fact, if you use your credit card appropriately, you can generate a little extra spending money in the process.

The Basics of Rewards Credit Cards

Just as the name implies, a rewards credit card rewards you for using it. Although the exact program varies from one card to the next, the basic premise behind all rewards credit cards is the same. Put simply, every time you make a purchase, you receive a certain number of points according to the dollars spent or you receive a certain percentage of your purchase back. If you receive reward points, you can use those points to purchase items, gift certificates, or possibly even cash.

Many rewards credit cards offer more rewards for certain types of purchases. For example, you may get 3% cash back on gasoline purchases and 1% cash back on all other purchases. In addition, each card will have its own method for cashing in the rewards. Some may automatically credit your account while others may send a check or require you to request your rewards. Therefore, it is important to search through all of your options and to select the rewards credit card that best suits your lifestyle. This way, you will be able to earn the greatest amount of rewards possible in the way that is most convenient for you.

Credit cards are notorious for having high interest rates, and this certainly holds true with rewards credit cards. In fact, rewards credit cards tend to have an even higher interest rate than non-rewards credit cards. Therefore, if you are going to use a rewards credit card in order to make some extra money, it is essential for you to pay it off at the end of each billing cycle. Otherwise, you will be spending more money on finance charges than you will be receiving in rewards.

In order to maximize the rewards you receive from your credit card, examine the purchases you make on a regular basis and determine whether or not those purchases could be made with your credit card. If your cable or satellite provider allows for automatic payments to be made with a credit card, for example, you can enjoy the convenience of having your bill paid automatically while also accruing rewards points. Similarly, rather than paying cash for your groceries, charge them with your rewards credit card instead- just make certain you do not exceed the budget you have already established for grocery purchases. This way, when the bill comes at the end of the billing cycle, you will be able to pay it off and avoid being charged with finance charges.

The copyright of the article Making Money with a Rewards Credit Card in Personal Debt Management is owned by Ryan Smith. Permission to republish Making Money with a Rewards Credit Card in print or online must be granted by the author in writing.