If you thought credit cards were useful only for borrowing money, think again. When used strategically, credit cards can be nifty tools for saving money by taking advantage of rewards. Here are just a few ways to use a credit card to make some extra cash.
Get cash back with rewards
If you’re a sensible spender and you’re able to pay all your credit card bills on time, some credit card companies may offer rewards. These rewards can include lowered interest rates, free coupons and sometimes even cash bonuses.
Not all cards offer these types of rewards so it’s worth shopping around. This approach may only be good for those that spend small amounts of their card – often rewards are given to those that are able to pay back their credit card bills quickly, which may be difficult if you’re borrowing large amounts on your card.
Take advantage of sign-up bonuses
A lot of credit card companies also offer sign-up bonuses as an incentive to attract customers. These often involve a financial reward if you spend a certain amount on that card in the first year.
This is a good strategy for those that are prepared to spend large amounts of money on a credit card. Of course, if you’re going to make this target, you need to be certain that can pay all this money back on time, otherwise you’ll end up paying extra fees that cancel out any money earnt. Sites like Fool compare these sign-up bonuses.
Make use of cash back apps
You may have seen apps such as Dosh that claim to offer cash back every time you spend money on your credit card. Is Dosh legit or a scam? Most of these cash back apps such as Dosh are indeed legit and can be great ways to make money, offering better rewards than a credit card alone could offer. Such apps may come with sign-up or subscription fees, which is something to bear in mind.
Give stoozing a go
Stoozing can be the most difficult way to make money from credit cards, but it can also be the most lucrative. It involves taking out loans on a credit card and then putting this loaned money into a high interest savings account.
The best way to do this is to use a 0% APR credit card – such cards do exist, but these rates usually only exist for a year, so anything you spend on these cards should ideally be paid back within a year. Using this card, you can then take out a low interest loan and put it into a high interest savings account. The interest paid on the loan must be less than the interest gained in the saving account in order to make a profit, which can be the tricky part given the scarcity of low interest loans and high interest accounts. This is a method that is best reserved for those that have the patience to do these calculations.