I just discovered a new way to make money off of those Cash Rebate Credit Cards which give you 1-5% cash back on purchases made using your card at the end of the month. This trick involves using this credit card to purchase travelers cheques or other liquid assets that can be converted back into cash which can be used to pay off your balance, leaving you with the 1-5% cash rebate reward and the opportunity to repeat the process.
First of all you need to get a Cash Rebate Credit Card which has no limit on the cash back rewards.
The following cards offer between 1-5% Cash Back Rebates on all purchases made using their credit cards and have no limits on the amount of rewards that you can receive:
Chase PerfectCard Mastercard or Visa
Blue Cash from American Express
SimplyCash from American Express
Once you have an active Cash Rebate Credit Card you will need to open a free checking account with a bank like Washington Mutual which not only offers free checking with no minimum balance, preferably one that also offers free checks. So basically you have a free checking account which costs you nothing and doesn’t require you to keep a minimum balance.
Using your Cash Rebate Credit Card go and purchase items that can easily be converted back into cash without losing their value.
Traveler’s Cheques work the best. So find a place that offers free traveler’s cheques. My bank, Citibank, offers free Visa travelers cheques to anyone that keeps a balance of over $25,000. Wells Fargo has the same type of deal on free traveler’s cheques. You can also get free traveler’s cheques from AAA if you have a AAA membership.
So purchase the maximum number of travelers cheques that your card will allow you to purchase. For my card it was $10,000 with a 2% rebate on all purchases. Make sure that they ring up this charge as a POS (point of sale) transaction and not a cash advance. This is important because if they treat the transaction as a cash advance then you will not get rebate credit for this transaction. So find a place that will ring up the purchase as a Point of Sale transaction.
Deposit these traveler’s cheques into your checking account and they will take approximately 24-48 hours to clear and post into your bank account.
Immediately write a check to your credit card company from your checking account for the full amount charged for the traveler’s cheques. So if you bought $10,000 of travelers cheques then mail them a check for $10,000 to immediately pay off your balance. It will take them 24-48 hours to credit your credit card back to a $0 balance and this is about the same time it will take the traveler’s cheques to post into your checking account.
So now your credit card balance is back down to $0 on your Rebate Credit Card and you will also have a 2% reward accrued on your credit card. For me it was $200 for the $10,000 purchase.
As soon as the balance is paid off you will be able to repeat this process and make another $200 for every $10,000 that you charge onto your card.
If you do the timing right you can run two of these transactions a week making an additional $400 per week. That’s $1,600 per month.
If you are really good, then you can apply for five of the card above and do this trick on all five of them, which would mean that you would be making around $8,000 a month, if you were able to charge a maximum of $10,000 twice a week on each of these five cards.
Over time they will increase your available credit which will enable you to do this with even larger amounts of money.
The money received from these rewards are completely tax free because this money is from a rebate on purchases that you have already made, so you won’t have to worry about paying taxes on this money at the end of the year.
If you are unable to purchase traveler’s cheques. You could purchase some other item that can be easily turned into cash without losing any value such as Gold Bullion Bars or Coins, stocks, or even post office money orders. Can you think of anything else that could be purchased using a credit card and then converted back into cash?
The credit card company might catch on after a while and put a hold on your account if they feel that you are doing something fraudulent. One thing that will create a red flag is making payments more than once a month.
Wouldn’t the credit Card company see what you are doing and stop paying the reward ? I enquired about doing something like this and the Bank said they would only process as a cash advance which means you are instantly paying 20 % interest rate and getting zero rewards - so be careful.
You could always set up your own POS system and be both the charger and chargee.
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;))
Actually there’s another 1 i would love to do a Remake of too + I’m surprized nobody has thought of it yet!!
I am trying this out, but instead of buying traveler’s checks I am setting up a merchant account (authorize.net) to use for the charges and transfers into my checking account.
Lets see if this works! Cross yer fingers!
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I worked for Capital One, when you make a purchase for a travellers check or any other cash equivalents it’s listed as a cash transaction, basically the same as getting cash from an ATM, in all cases, at least at Capital One cash transaction were not eligible for any rewards.
If you purchase the traveler’s cheques at a bank then yes you are correct they are treated like cash, but if you purchase them at AAA then they run it like a point of sale transaction.
I tried this this weekend.
However you can set up your own merchant account and then charge yourself as a point of sale and it’s much easier than going out and buying traveler’s cheques.
What I am planning on doing is funding an online poker account using the credit cards, then having the poker room mail me a check back. It would be easier than setting up your own merchant account online. Full Tilt Poker has accepted all the credit cards I have used so far, and they charge no fees. Good luck!
Great idea! However do they count funding the poker account as a purchase or a cash advance?
Amy, what is the reward % on the specific credit card you are using?
I am using the Citibank CashReturns MasterCard which gives you 5% cash back on all purchases made within the first 90 days.
i dun understand these things they couldn’t rly be makin money unless you where paying fo’ watchu saw… but no u ain’t payin fo’ it so how they makin money?
It just shows the power of internet in making connections and ‘reaching out’ to people. I never cease to amaze me the power of internet marketing and promoting brands online.
If you setup a merchant account, every transaction will cost you 2% or more(merchant’s fee) and then you get back 2% reward. Let’s see, +2% -2% = nothin!
I know. The merchant account didn’t work the fees were way too high.
I was stuck doing this with my WAMU/Chase free checking account instead, it works but it’s not as convenient.
The fees keep getting lower and lower, those of us in the merchant services industry, who provide merchants and small business owners with the equipment and support to accept credit cards are the one’s going to be put out of business.