This is probably the simplest passive income stream to create, it is also potentially the most dangerous. When playing with fire use an Insulating Mitt
Most people have credit cards, they use them to charge normal expenses throughout the week, and pay off the balance in full well before the due date. Dave Ramsey would beat us to a pulp but if you don’t spend anymore than normal and avoid all interest/fees they can be a very convenient tool.
If this is the case you may want to consider a credit card with a rewards program, or consider changing your credit card rewards program to one you will actually use. Up until about a year ago we had been using a Citibank credit card with rewards and earning “ThankYou Rewards Points.” We saved up enough points over the course of a few years or so to trade them for a $500 student loan rebate. Not bad at all and it will soon be reflected in the loan section of our net worth statements.
Chase has recently come out with a card and rewards program offering 3% cash back on the top three categories of spending each month, with 1% on all other purchases. So if this month you spend more on gas, groceries, and utilities you get a little more back there. Next month if its gas, groceries, and hotel stays in Las Vegas, then so be it. Whatever the highest three categories are, that is where you get the most cash back. It’s the best credit card rewards program we’ve found so far.
On average we receive about $50 back every other month by simply choosing this card when paying for normal required things. We have found that straight cash back is the most simple system for us. Points to redeem towards stuff or airline miles etc. just create more of a hassle then good (even though sometimes through certain programs you may be able to earn a little more through careful planning)
The credit card company’s goal is for you to reach for their card at every opportunity, and your goal is to not spend any money at all, but IF you must, you might as well get a little cash back after paying your balance in full each month.
We also received a $50 bonus after our first statement. Kind of nice.
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{ 3 comments… read them below or add one }
I second the recommendation on this Chase credit card. It was my first rewards card. Even though I don’t spend enough to really get a lot back in rewards, I wanted to have a card (and build the credit line on it) so I could use it and earn rewards once I start making a better income. The $50 cash back for signing up was a huge incentive and I got it fairly quickly. No annual fee is good. My main issue with this card it that you can only get 3% cash back from merchants that correctly code themselves (and many don’t).
-Lo. Price
Loprice.blogspot.com
(a) I am happy to have found your site! A couple at 23/24 who is this serious about finances? I’m into that.
(b) I was just listening to Dave Ramsey last night and heard him make that comment about millionaires not being able to say you made it off the island. Priceless.
(c) $3.99 sounds pretty fantastic for a gallon of gas. In fact, people were filling tanks at that price, in anticipation of the raise yesterday.
*who, not you.