How Credit Cards Can Make You RICH
Credit cards are not as evil as you’ve been led to believe! Believe it or not, they can actually INCREASE your cash flow. Don’t believe me? Well, keep watching. We all know that whenever you swipe your card, you’re racking up charges – and as a result your debt grows.
At the same time your credit card issuer is making money off interest and fees, and you are losing more and more of your hard-earned income. But, with a few focused techniques, not only can you pay off your debt, you can put your credit cards to work FOR you! When you use them strategically, you can generate some extra cash to make an additional payment each month.
Or if you’re debt-free, use the funds to pay for an upcoming trip or that flat-screen TV you’ve always wanted. That’s right, in this Article I’m going to share how you can use credit cards to YOUR advantage! Are you ready? Let’s go!
As you might know, one of the primary ways that credit card companies attract new users is to offer lump-sum sign-up bonuses. These usually promise an enticing reward of points, cash, or flight miles. All you have to do is hit a certain spending level on the card within a brief introductory period.
How you ask? With manufactured spending you can qualify for the bonuses on credit cards without depleting your financial reserves. Let’s say that you apply for a credit card with a one year interest-free promotional period, you also get a 5% cash advance, and commit to paying off the debt within 12 months.
Instead of shopping for traditional goods or services to meet the necessary thresholds, you buy things you can turn back into cash, which you then use to pay your credit card bill. One of the classic methods to do this is buying Visa and Mastercard gift cards and purchasing a money order payable to yourself.
Another example is if you purchase gold and send the cash to a friend via Venmo or PayPal. You may also choose to invest it. Remember credit cards will only get you in trouble if you use them as liability rather than an asset.
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we all know times are tight right now. But what should you do if you have less than $1,000 in your bank account? Well, you can use your credit card as leverage to create passive income for yourself. Okay, here’s an example: you and friend can partner up and kick start your next side hustle.
Or … take a training class and run with it! See how far you can get in one month, three months, and six months. Always remember having credit cards is NOT supposed to break you down. By using them wisely they will build you up and you will reach your financial goals sooner than you think!
The next way credit cards can make you rich is by earning bonus rewards points. You can earn bonus points from your credit card on almost anything you do. The best way to leverage credit cards for money, in my experience, is to open a new card with a large flight mileage bonus and use the points toward a free or heavily discounted flight. You can take your pick of credit cards offering sign-up bonus points too.
example, the Chase Sapphire Preferred credit card – named one of the best travel rewards credit offers by GOBankingRates – let’s you earn 50,000 bonus points after spending $4,000 in purchases with the card in the first three months of opening an account.
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That’s the equivalent of $625 you can use toward travel. So, you might want to use this card, or similar rewards cards, for most or all of your expenses. And if possible, see if you can rack up rewards points by using your credit card to pay for big ticket monthly items, like your rent. Did you know that you can also leverage your credit card by using cash-back rewards?
It’s true! This can help you save money and build a nest egg. But there’s more! If you’re not sure what to do with your rewards, we’ve got some suggestions.
First, let’s take a look at how much money you could be making if you put your cash back into an investment account. If you earn $300 in cash back every year, and invest that $300 into an account that earns 7 percent interest annually, in 10 years your balance will grow to more than $4,000.
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And as an added benefit, some rewards credit cards allow card owners to link their cards to eligible investment accounts. Take the Fidelity Rewards Visa Signature credit card for example: you can earn unlimited 2 percent cash back on purchases and have those rewards automatically deposited into an eligible Fidelity account, such as a brokerage account, a 529 college savings plan, a retirement account and more.
To maximize your investment earnings, look for credit cards with no restrictive categories—and don’t forget about the power of compounding interest! Once you start to see for yourself how this all can work in your favor, the next strategy you may want to try is called credit card arbitrage.
Credit card arbitrage is the ability to take money from a credit card, write yourself a check, and then use that money to put it into a savings account. Over time, you will see an increase—but you’ll need to leave that money there for at least a full year.
Then at the end of that year, you’ll take the difference between what’s in your savings and what’s on your credit card. Whether you like taking risks or not, always do your research before making any investments and keep a close eye on spending. Use credit cards to your advantage and earn free cash from everyday purchases to pay down debt.
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