About 33 percent of Americans have between one and four credit cards in their name, and approximately 167 million Americans are carrying a credit card at all times. However, are each of them reaping the benefits of swiping their cards?
Credit card reward programs have some attractive perks. Some credit cards have cash-back bonuses, some have sky miles and others may have points systems. You simply have to swipe your card and you get the rewards. However, there may be a loophole when it comes to reward systems. You may be able to make money from swiping your credit card.
Use your credit card to buy gift cards
Gift card kiosks are found just about everywhere. If you are looking to reap the benefits of your credit cards rewards program, you may want to consider buying gift cards that you will use with your credit card. For instance, if you plan to spend money at a grocery store, a gift card from that store would be useful and it would money you would spend anyway. You will receive reward points for things that you would spend money on anyway.
Earn money where you already shop
AmEx Offers is one of the best credit cards for earning money where you already shop. You can save money at stores like Wal-Mart, Target, Costco or wherever you do your regular shopping. Simply log in to your AmEx account and add the stores that you like. Many other credit cards offer this as well. For instance, Discover offers 1 percent cash-back on purchases at Wal-Mart. Additionally, many companies also allow you to rack up cash-back money and apply it to your credit card statement, so you are practically getting paid to shop.
Free cash back
“Free” cash-back rewards can be earned by purchasing money that you will use to pay off the credit card. For instance, there have been a number of people that buy money orders with their credit cards, deposit money orders into their account and then use them to pay off the credit card. In return, the credit card user receives cash back for the purchase of the money order.
Always opt for cash back
Credit card companies offer different rewards for qualifying purchases. These rewards tend to be in either cash or airplane miles. For instance, if you sign up for cash back rewards on your purchases at Wal-Mart, you will get a percentage of the money you spend on your credit card back when you shop there. When it comes to whether or not you should take the cash-back bonus or the sky miles bonus, always opt for the cash-back rewards card. Unless you travel a ton (and I mean a ton), you won’t get good use out of the miles bonus.
Amazon has approximately 244 million active users. If you use Amazon.com for your shopping needs, you can use your credit card to buy an Amazon.com gift card. For instance, a friend of mine bought a $1,000 Amazon gift card. This prepaid for the majority of her Amazon purchases through the year and she got paid her initial cash-back rewards bonus.
You may also want to point your attention to the other rewards or benefits offered by your credit card company. For instance, Discover offers a “freeze” option for when you temporarily misplaced your card. This may be a benefit that is of interest to you if you misplace your card regularly and find it as soon as you report it lost (it happens to the best of us).
Most of these strategies are not effective unless you can pay your entire credit card bill when it comes. If you are unable, you will end up paying high credit card interest rates in exchange for rewards miles, points or cash back. As a rule of thumb, spending money you do not have is a recipe for disaster.
Photo: Flickr: 401(K) 2012
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