How To Leverage Credit Cards

By Bruce Boswell •  Updated: 12/03/21 •  6 min read
Filed under: Credit Cards

When it comes to credit cards and their uses, there is much more to it than the obvious. Whilst credit cards can be a useful tool in building a positive credit score and as a financial safety net, the overall perception of credit is usually one of debt. 

However, when used differently, credit cards can actually increase your wealth. By considering your credit card as an investment card, you can flip the negativity around credit and transform it into a positive. 

How To Leverage Credit Cards

In this article, we will look at how you can leverage your credit cards to create and increase your assets.

Maximize New Customer Welcome Incentives

Lots of the big credit card companies offer lucrative incentives to new customers that can really add to your wealth portfolio.

These incentives are typically related to travel and air miles, and follow the principle that you will be offered a set amount of air miles if you spend a certain amount of money in a specific time frame.

The best way to monetize these incentives is to use these miles for any travel expenses and then keep the money you would have spent on travel.

With new cards offering these types of incentives, it is imperative that you are able to make repayment on time, and in full, so only take out this type of card if you are able to do so.

Cashback Cards

Another way to use credit cards in your favor to create additional income streams is through cashback cards. These credit cards typically offer a percentage of cashback for purchases made through the card.

If you are using your card frequently to make purchases, you can increase your income stream very easily.

Have a look through your standard average monthly transactions and see which ones could be charged to your cashback card instead.

Look to pay for groceries, dining out, gas, and utilities via your credit cashback card instead of paying for it directly from your checking account. 

Once transactions have been made, transfer the amount from your checking account to pay off the balances in full. This will minimize the risk of reaching your credit card limit, which can be detrimental to your credit score.

Use Your Credit Card For Cash Flow

Using your credit card to pay for everyday necessities and services is a great way to create a cashflow system. Remember, money is always better in your account! 

With credit cards offering a 30-day repayment term, managing your money this way will increase your credit score and create positive spending habits.

Discuss repayment plans with your bank and set up automatic payments to clear your monthly expenditure to avoid charges or deferred payments.

Pick Up The Check

Another way to leverage your credit cards is to always pick up the check! When out and about with friends and family, offer to be the primary payer. They can return the money to you via cash or through your checking account for you to then pay off the balance.

By increasing your credit card usage and repaying in full and on time, you are actively improving your credit score. This will open up a world of new deals and financial opportunities.

Reinvest Your Rewards

If you consider any rewards you gain from new card incentives or cashback cards as ‘free’ money, you can reinvest into the stock market as an investment.

By doing this, you won’t feel that you are losing out on any disposable income, but instead making your rewards work for you.

With an average annual rate of return at around 7%, any investment into a stock mutual fund could offer a significant return on your investment over a 10-year period.

You can also use a credit card which is linked directly to a brokerage account which will allow you to deposit your card’s rewards directly into your investment fund. 

Invest In Your Qualifications

This is a little different in using your credit card to improve your wealth. However, in certain circumstances it can make a huge difference.

If you are currently employed in a position that would greatly benefit from some formal qualifications, and therefore result in a pay increase, then this is for you.

Consider your credit card as a means to invest in your own future. Use your credit card to purchase some formal training which will directly benefit the monthly salary you will bring home.

Set up a monthly12 month repayment plan, and within a year you would have upskilled in your role, increased your income, and repaid the cost of the training.

Final Thoughts

So as we can see, when used correctly, there are many ways in which you can leverage credit cards to improve your wealth and assets. 

By following some, or all, of the methods above, you can use your credit cards to add income streams and increase financial stability. However, it is important to understand fully how these methods work before embarking on them.

Mismanagement of credit cards and using them incorrectly is the biggest cause of financial debt. It is crucial to only use credit cards in the above ways if you can adhere to the following golden rules:

Bruce BoswellBruce Boswell

Bruce Boswell

Bruce Boswell enjoys researching and writing about all things related to investing and saving money. Whenever he has a chance, Bruce loves travelling all around the world with his wife and trying new foods.