The Reality of Making Money Using Your Credit Cards
It seems as though with the down economy, many people are looking for more and more way to bring money in. However, is it possible to make money using credit cards? Several people have brought up balance transfer charge cards in other articles for making money so we will dissect this process and see if it is actually possible. I have also seen many articles about making money with cash back charge cards but, is the small percentage of cash back worth it?
Starting with balance transfer charge card accounts. I have read what seemed to be a pretty simple process. Consumers would apply for a new balance transfer credit card account. Upon receipt of their new balance transfer charge card account, they would transfer all the money possible at 0% interest to a savings account for the introductory period. Therefore, the consumer would earn interest on the money that they are currently borrowing for free. But, is this money really being borrowed for free?
Well, I have indeed found a few wholes in this story. First off, balance transfer charge cards are designed to pay off another credit card fees transferring the debt. Balance transfers are not designed to be transferred to a personal checking or savings account. This would be a cash advance. A cash advance which tends to carry a higher interest rate. Also, if the bank allows the Americans to call this a balance transfer, most charge card issuers are now charging fees of 3% to 5% of the total amount of the transfer for processing. With the average savings account yielding far less than this in interest, it seems to be almost impossible to make money this way.
I will say however, in very rare circumstances, consumers with EXTREMELY good credit will get an offer in the mail that may allow them to transfer money to a bank account at zero percent interest for a year or longer with no fee! However, this is very rare these days, it simply costs the banks too much money!
Now let’s look at cash back charge card accounts. Cash back credit card accounts work like any other credit card. The difference is that when people use cash back cards, they will earn points towards cash back rewards. But, how quickly can consumers earn money this way.
The average cash back credit card account pays 1% to 3% cash back bonus on some purchases. However, the interest rate on cash back charge cards is much higher. Also, these charge card accounts tend to have annual fees. So, to make any money using a cash back charge card, Americans will need to pay the card off immediately after each buy to avoid interest. Also, the Americans using this technique will need to use their credit card often and may get a bit carried away with it. This may lead to a financial hardship situation.