The Reality of Making Money Using Credit Cards

It seems as though with the down economy, many Americans are looking for more and more way to bring money in. However, is it possible to make money using charge cards? A great deal of Americans have brought up balance transfer credit card accounts 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 card accounts 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 charge card account. Upon receipt of their new balance transfer credit 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 credit card accounts are designed to pay off another credit card 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 APR. Also, if the bank allows the people 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, people 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 credit card accounts. Cash back credit cards work like any other credit card. The difference is that when consumers use cash back cards, they will earn points towards cash back rewards. But, how quickly can Americans earn money this way.

The average cash back charge card account pays 1% to 3% cash back bonus on some purchases. However, the interest rate on cash back charge card accounts is much higher. Also, these charge card accounts tend to have annual fees. So, to make any money using a cash back credit card account, Americans will need to pay the card off immediately after each purchase to avoid interest. Also, the people using this technique will need to use their charge card often and may get a bit carried away with it. This may lead to a financial hardship situation.

Honestly, I have to say, don't look at credit cards as a way to make money, look at them as a financial tool that can help maintain financial stability in the household. Looking at things this way will help many Americans avoid future financial hardships!