3 Ways Your Credit Cards Can Make You Money

Everyone knows how easy it is to overspend with credit cards and be left with financial devastation! High interest rates, late fees, finance fees – credit cards can be our worst nightmare when not used responsibly. But did you know that you can actually make money using credit cards and pure discipline?

Here are 3 ways your credit cards can earn you a little money, instead of costing you a fortune:

1) The 0% financing offers. In an effort to compete with all the other credit cards consumers have to choose from, credit card companies routinely offer 0% interest offers. Usually the 0% interest offers are on new purchases or balance transfers only, but sometimes you can find an interest free promotion that includes cash advances. This is the golden ticket!

Using your 0% interest cash advance, withdraw as much money as you are able and immediately deposit the money into a high interest earning savings vehicle. You can choose from high interest savings accounts, like those offered through ING Direct or E*Trade; or you might select a 6 or 12 month certificate of deposit (CD) with even better interest.

While your cash advance is busy earning interest, you can send just the minimum amount due to the card for the full 12 month interest-free period. Right before the promotion ends, withdraw enough money to pay the remaining amount due on the credit card and the rest is yours to keep. Re-invest the interest, or try getting a new 0% interest offer from another card to start the process all over again. Just be careful of your credit score – it may go down temporarily while you have all of that money out on credit; but when you make monthly minimum payments on time, it will go back up over time provided you don’t make any other financial changes in your life that would effect your overall score.

2) Use cash back credit cards. There are a number of credit cards offering cash back rewards. Select a card that offers the highest amount of cash back on purchases you make all the time, and then use the card for as many purchases that you can.

It’s important to keep track of how much you are spending and be religious about sticking to a budget when using cash back cards to try and earn money. If you spend more than you should, you’ll have trouble paying the card off at the end of the month and your plan will be spoiled. The only way to actually earn money using this method is to pay the balance in full every month, therefore avoiding interest fees on your purchases.

3) Look for cards with incentives. From time to time, credit card companies spend money to attract new cardholders because they know statistically, a cardholder will earn them more in interest and fees than the money they spend to attract them. If you find credit card offers with $50 sign up bonus or similar, you might consider applying for the card to get the bonus, and then simply not using it. Just beware that opening too many credit accounts will negatively effect your credit score, so you will want to be highly selective with this method, and ensure you have the ability to recover from the credit score drop quickly.

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Debbie Dragon is a freelance writer for Creditorweb.com, where she writes about credit cards, rewards programs and personal finance issues.