Over the last 10+ years, credit card rewards have earned my wife and I thousands of dollars in free money — in the form of cash, gift cards, and travel — just for buying the stuff we would have bought anyway.
It’s not hard. We just put as much of our spending as possible on credit cards, and strategically sign up for new ones with attractive bonus offers.
And because we pay our balance in full every month, it’s all been at 0% interest.
Some say banks and credit card companies are evil.
I think they’re awesome.
You just have to be smart about how you use them.
In this free guide, I’ll outline:
- Why You Should Care About Credit Card Rewards
- How Credit Card Rewards Work (and why 1% cash back isn’t a great deal)
- How to Pick Which Cards to Apply For (and how often)
- How to Qualify for Business Credit Cards
- Credit Score Myths and Realities
- What’s in My Wallet and How I Track Cards
- Legit Ways to Meet Your Minimum Spending Requirements
You might not think of credit card rewards as a side hustle, but it’s been a profitable hobby of mine for years.
After all, every dollar counts!
Here’s how it works.
Here are two reasons you should care about credit card rewards:
- Free money
- Free travel
Two of my favorite things!
In this free course, I’ll show you some easy ways to explode the cash back you’re probably currently earning on your spending.
On the travel front, points and miles from credit cards have helped my wife and I earn thousands of dollars in free travel and other benefits over the last few years.
We’ve visited Asia, several spots in Europe, Mexico, and all over the US.
It’s been said that travel is the only thing you buy that makes you richer — and plane tickets are still my favorite thing to buy — but it’s even more fun when you can buy them for free.
Most credit cards offer some sort of cash back program, usually 1-2% on all purchases, but sometimes up to 5% for spending in certain categories.
This is the bank’s attempt to get you to pull out their card when you make a purchase — instead of all the others in your wallet.
That means if you spend an average of $1150 a month on charge-able purchases like food, gas, entertainment, and apparel (the national household average according to one report), you should be earning at least $138 a year in cash back rewards.
It’s obviously not a lifestyle-changer, but then again, it’s free money.
Still, You Can Do MUCH Better
Now if you divided that $13,800 in average annual spending among a few cards with attractive sign-up bonuses, you could earn the equivalent of $1000-2000 in rewards.
A heckuva lot better than $138!
For years, I had just one or 2 cards in my wallet, and would sit back and happily earn my 1-2% cash back. Knowing what I know now, it pains me to think of all the money I left on the table!
What do I mean? The magic really happens when you take advantage of certain sign-up bonuses for new cards — earning the equivalent of 20%, 30%, 40% cash back or more in travel value or statement credit.
Here’s just a really simple example:
The Chase Freedom card is currently offering $150 as a sign up bonus when you spend $500 in the first 3 months. That’s 30% cash back, or probably 30x better than what you’re earning on your spending right now.
And if your household is anything like ours, it won’t be much trouble to spend $500 on your card in 3 months. Plus there’s no annual fee!
In summary, 1%, pretty weak; 30%, we’re doing much better.
Now obviously there’s a bit of strategy involved since you can’t just go opening a new account every time you hit the $500 minimum. More on that below.
Before you dive in, there are a few “rules” to keep in mind in this game.
The 3-Month Cooling Off Period
First, you don’t want to apply for credit cards in quick succession. Instead, I recommend waiting at least 3 months in between applications.
Each application is a note on your credit score. If you’re seen to be applying for too much credit in too short a window, it can raise a red flag — hurting your credit score and making it harder for your application to get approved.
Now, I’m not saying I’ve never broken this rule … but think of it as a general guideline or best practice.
The 5/24 Rule
The 5/24 rule is specific to rewards credit cards issued by Chase. It dictates you can’t open more than 5 accounts with Chase in a 24 month period.
The reason this one comes up is because Chase is one of the largest card issuers and has some of the most attractive cards.
If you’ve been going after credit card rewards for awhile, you might want to apply for the same card you did in the past.
In most cases the banks are OK with this to try and win back your business, but each financial institution has different rules on whether or not you’re eligible for the sign-up bonus again, whether your current card needs to be cancelled, and how long it’s been since your last bonus.
(Probably not an issue if you’re just starting out, so I wouldn’t stress too much about it.)
How to Evaluate the Best Credit Card Rewards Offers
Like we’ve discussed, credit card rewards come in two main “flavors”: cash back and travel. But how do you know what’s a good deal and worth applying for?
Check the video to find out:
My Cash Back Card Recommendations for Starting Out
At press time, the cards below all had:
- Strong 30% return on spend bonuses.
- Low minimum spending requirements to earn that bonus.
- No annual fee.
Chase Freedom Unlimited
Capital One Quicksilver
Any one of these 3 cards would be a great first application to get your feet wet in the world of credit card rewards.
My Travel Card Recommendations
Travel rewards credit cards come in 3 main categories:
- General — points and miles can be used across a variety of outlets (Issuers like Capital One, Chase).
- Hotel — points can be used at certain hotel brands (Marriott, Hilton, SPG, Hyatt).
- Airline — points can be used on certain airlines (Delta, American, Southwest).
Capital One Venture
My favorite rewards card is the Capital One Venture card, which offers “double miles” on all purchases. You can trade in your miles for statement credits, gift cards, or travel purchases.
Capital One is currently offering a 50,000 mile sign-up bonus (worth $500) after you spend $3000 in the first 3 months. The $95 annual fee is free for the first year.
Chase Sapphire Preferred
The Chase Sapphire Preferred card also has a strong bonus with 50,000 Ultimate Rewards points (worth $625).
What’s cool about the Ultimate Rewards program is you can transfer points 1-for-1 to lots of travel partners including United and Southwest. (Or you can book directly through Chase’s rewards portal.)
At $4000, the minimum spend is a bit higher than the Venture card above, but the bonus points still amount to a 15.6% return on spending.
The $95 annual fee is also waived for the first year.
Southwest Rapid Rewards Plus Card
For domestic travel, we’re all about Southwest. In fact, one year we flew to Seattle, Chicago, Washington DC, Dallas, Orange County, Charlotte, and Las Vegas — all free on Southwest points.
The Southwest Plus Credit Card comes with a 40,000 point sign-up bonus after $1000 in spending in the first 3 months.
Those 40,000 Southwest points are worth up to $600 in free travel, or the equivalent of a 60% return on your spending!
As a side hustler, you’ve practically doubled your options for credit card rewards by being able to apply for business cards.
You already know you should be keeping your business income and expenses separate from your personal accounts, and a business credit card can help make that easier.
What Qualifies as a Business?
This probably doesn’t come as a shock, but to apply (and get approved) for a business credit card, you DO need a business.
Now if you’re side hustling, you’re probably already in business — even if it doesn’t feel like it.
Do I Need to Register My Business?
By default, you’re already set up as a sole-proprietor. You don’t need to create an LLC or incorporate to apply for business credit cards.
Your business also doesn’t need to be profitable or even to have any revenue at all. Most startups have some expenses early on, and for better or worse, banks are often happy to lend you those startup costs.
(Of course, don’t spend money you don’t have.)
If you are “pre-revenue”, that’s OK. Just fill out the application as accurately and truthfully as possible!
Do I Need an EIN?
An EIN, or Employer Identification Number, is also not required to apply for business credit cards.
(Though it’s free to get one at IRS.gov, and you may need one to open a business bank account.)
Most applications will ask for your social security number anyway.
My Recommended Business Credit Cards
You can check out the best current offers on business credit cards here.
Chase Ink Business Cash
The Ink Cash card currently carries a $500 sign-up bonus after spending $3000 in the first 3 months. I like this one because there’s no annual fee, and you can earn up to 5% cash back for spending in certain common business categories.
Chase Ink Business Preferred
The Chase Ink Business Preferred card can earn you an 80,000 point sign-up bonus (worth $1000), after a $5000 minimum spend in the first 3 months. That’s a healthy 20% return on spend.
Where it gets really fun though is this card offers 3x points on advertising spending. If you’re spending ad money on Facebook or Google, this will add up fast!
For instance, when I was running my shoe business, I was spending $500-1000 a day on advertising, and racking up a ton of credit card points.
Applying for credit cards can impact your credit score, but probably not in the way you’re thinking.
There are a few main factors to consider, and I’ll address those below. However, the biggest thing is to be a responsible borrower: don’t spend money you don’t have, don’t max out your cards, and don’t pay late.
Each time you apply for a new credit card, that counts as a “credit inquiry” on your credit report.
Generally speaking, inquiries are OK, and each one will only ding your score perhaps 3 points. But too many inquiries in too short a time is a red flag to the banks and to your credit score.
Banks are risk-averse and to them, it’s like, “Whoa, why is this person suddenly in need of so much new credit?”
That’s why I recommend only applying for 1 card every 3 months.
Open Lines / Credit History
The longer you have an open credit account in good standing, the better.
That’s why keeping a card forever, especially one with no annual fee, can help your credit age.
Credit utilization is the amount you have charged divided by the amount you could charge. Basically, how much of your available credit line are you using?
This is where having multiple cards can actually help you.
Banks and credit monitoring services want to see low credit utilization — below 30% is a general guideline.
That means if you have $10,000 in available credit, but keep less than $3000 charged, you’ll be in good shape here. It’s a signal that you’re a responsible borrower — you have all this money available to you, but you only use a small portion.
My Actual Credit Score
I found a cool free service from Capital One called CreditWise that will give you your actual credit score for free, even if you’re not a Capital One customer.
Here’s what came back when I signed up:
So no, as long as you’re a responsible borrower and credit card user, you don’t have to worry about this harming your credit.
I created a spreadsheet in Google Docs to help me keep track of the various credit cards I have, their benefits, and the annual fees.
You can save a copy for yourself here. (Just be sure to hit File > Make a Copy, before you add any of your own info.)
If you plan ahead a little bit, it’s usually not hard at all to meet your minimum spending requirements.
Especially for the cash back cards we looked at — our family can easily find $500 worth of groceries, utilities, insurance, or other expenses.
Here are some of the common things we buy to meet the minimum spend:
- Transfer over all recurring monthly payments — Internet, TV, cell phones, Netflix, life insurance, utilities.
- Make the card your “daily driver” for every day expenses like gas and groceries.
- Plan big purchases around new credit card sign-ups. That could be stuff like furniture or flights.
- Group or family purchases. When you’re out to dinner with friends, offer to pick up the tab and have everyone give you cash.
- Car repairs.
- Medical expenses. With two young kids in the house (and an injury prone dad!), we sadly have had quite a few doctor bills lately!
- Charity donations. Win win!
For business cards, here’s how I typically meet my minimums:
- Recurring expenses like hosting and software
- Contractor payments
- Pre-paying for software or licenses
- Conference registrations (and flights to those conferences)
- Equipment like webcams, monitors, or a new laptop
- Inventory purchases. My experiments with the Amazon FBA business were great for meeting minimum spend requirements!
The bottom line is to be intentional about using the new card and don’t sign up for something if you can’t see how you’ll reach the minimum spend required for the bonus.
Two Rules for Responsible Credit Card Rewards
1. Don’t spend money you don’t have.
Maybe this isn’t a truly entrepreneurial side hustle, but it does save me and my wife pretty significant money each year — dollars that go directly to our bottom line.
And that’s the same as earning more, right?
What’s in your wallet? Take action today and start working on a new sign-up bonus.
Once you learn about the offers and opportunities out there with credit cards — and start to reap the rewards — I think you’ll be as hooked as I am!
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