As of recently I’ve heard a lot of negative comments about credit cards. I think the negative comments about them are often misplaced. I believe that credit cards are really useful, if used wisely. That’s why I’m here today writing a post to show you my story of how I received $312.03 in cash back rewards and $155.00 cash back as a sign up bonus ($467.03 in cash back rewards total). At the same time my credit score has gone up from a FICO score of 702 to a 741. Anyways $467.03 for me is 2 months in extra groceries. 2 months of extra groceries simply because I decided to use a credit card instead of a debit card or cash for purchases I was already going to make!
I know that this amount of rewards is probably a paltry amount to most people. However, to me this is an accomplishment. Why? Because my total income last year was around $8,000.00 total pre-tax. I do not make a lot of money since I’m currently a full-time college student. I’m only able to work part time on my online business. Anyways, back to the main point, at a rate of 5% cash back I would have spent a total of (20 x 312.03)= $6,240.60 at the least, because 312.03 is 5% of 6240.60. That would be if all of my rewards gave 5% cash back. Of course, that’s not true though because part of my cash back came from 2% cash back rewards as well. Therefore, I’m going to use the 2% mark to consider the approximate max I have spent. It would be (50 x 312.03) $15601.50 if we were to calculate it at around 2% cash back alone (Note that I had 1%/3% cash back as well, it’s just the majority of the amount is from 2% and 5%). Anyways some people are probably sitting here really confused right now and wondering “How can a college student who only made 8 grand last year spend somewhere between 6-16 grand on credit cards”?
Update: I’ve found out that I’ve used at least $15,766.28 after adding up all of the payments I have made on my credit card in the past 12 months.
How Did I Do It?
Well I’ll tell you how. I did it through a method called manufactured spending. Here’s a link to how manufactured spending works. In fact the Buying and Reselling Items on eBay/Amazon section describes exactly what I do. I basically used my credit card to fund every single purchase I made for my business on Amazon and eBay (and for daily living too). Around 90% of the items I bought sold within 3 months for a profit. Which meant that I made quick profits, and I managed to flip the item quick enough so that I could repay my monthly credit card bill. I will break down the exact method I used for each credit card in the section below.
The four credit cards I used to achieve this were the Discover It, Chase Freedom, Chase Amazon, and Fidelity Rewards Card. Please check out my “best cash back credit card“ article if you would like to learn more about most of these cards.
Note: The time period I’m considering for my cash back rewards is from November 2013 to November 2014. Also, click on the images in order to enlarge them if the numbers are too small for you.
This has been my longest running card. I’ve had this card for about 15 months now. It’s one of my most favorite cards because of its great customer service, website’s ease of use, and great cash back rewards. I really enjoy the 5% cash back that the Discover It card offers each quarter. As of right now, my discover card accounts for half of the cash back I received at $162.31 total.
The Discover It card offers several categories over the course of a year. The two that I take advantage of are the restaurant and online shopping categories. Naturally the restaurant cash back is pretty easy to explain. I basically received 5% cash back every time I ate out at a restaurant, fast food chain, etc. For me this was basically everyday as I’m a commuter student at my college. I alternated between places such as Chipotle, Mcdonalds, and Taco Bell every time I was on campus. I racked up a decent amount of points when this option was offered for a whole quarter.
Then there is the online shopping categories. The reason I like this card is because the online categories includes EVERY online purchase out there. It does not matter what site you use it on. Whether it be Amazon, eBay, Target, or Walmart. You receive 5% cash back every time you make a purchase through an online site. I did not take advantage of the offer when Discover had it up last November. However, I’ve managed to take advantage of this offer to its fullest extent this November. I maxed out the $1500 I could spend on online shopping. I spent all $1,500.00 buying DVDs to sell on eBay. It netted me an easy $75.00 in cash back in about a month.
The next card I have is the Chase Amazon card. This is my second oldest card. To be honest, I got this card on a whim. I saw that it had a $30.00 sign up bonus. I applied for the card immediately. Looking back, the sign-up bonus was not that great at all… However, it all worked out in the end as I found out that I can receive 3% cash back on Amazon purchases year round. My other credit cards only allowed 5% cash back on Amazon during the same three months of the year. So this worked out decently well for me the other 9 months.
Essentially I used this card for everything that I could ever get on Amazon. I used the card on purchases for school. I bought textbooks, paid for book rentals, and bought school supplies with the card. At the same time I also bought items for my business on Amazon . I bought boxes, paper, bubble wrap, and even DVDs which I resold on Amazon and eBay. Lastly, I bought items for my personal enjoyment using this card. I bought things such as clothing, video games, etc. All in all, I managed to spend about $1,550.00 on this card to receive $46.49 in rewards.
This card is tied in second as my second favorite credit card along with the Fidelity Rewards card. It’s one of my newer cards that I received three months ago. The Chase Freedom card is very similar to the Discover It card in the sense that it offers 5% cash back on select categories each quarter. The only major differences between the two cards is the fact that the Chase Freedom card offers amazing sign-up bonuses. In fact, when I signed up for the card I received $125 total from simply spending $500 and adding another authorized user on the card.
Up to today I’ve received $141.99 in total cash back rewards from this card. $125 of the $141.99 comes from the sign-up bonus. Leaving $16.99 which comes from actual cash back rewards from purchases. I haven’t really brought much from amazon from the last three months so that kind of explains why the rewards are so low. I expect to generate more cash back rewards in the next quarter when this card does not overlap with the rewards I receive from my Discover It card.
This card is tied as second favorite card. I have 5 credit cards total if you’re wondering. The other credit card that I have that’s not listed here is my Target store credit card. I only shop at Target for groceries, so I decided to get a card there as well. Anyways, this card is solely used for my purchases I make for everything else that my other cards do not cover. For example, my Discover It and Chase Freedom has a $1500.00 limit on 5% cash back categories. Therefore I generally use this card when I reach the limit on those cards. If you’ve read earlier, about my Discover card you’ll notice that I maxed on that limit in the first month from buying DVDs to resell on eBay. Ever since that I’ve been using this card which is my next best option. I’ve used it to buy things to resell on eBay after my 5% cash back on online shopping ran out. It gives 2% cash back on ALL purchases.
I’ve earned a total of $86.24 from this card alone. 4960 points is available and 3664 points is pending from this month’s purchases (100 points=1$). The points that are pending are from my $2000 spending spree used for Black Friday. This isn’t as bad as it sounds though. I only spent about $500 for my enjoyment. About $300 went to buying a game console and a new tv. The other $1500.00 actually went to buying DVDs that I plan to resell for my eBay business.
I also want to take time to go over another method I use in conjunction with this card. It’s something called eBay Bucks.This is great for any of you guys out there who have both a registered eBay and Paypal account. As eBay allows you to earn an extra 2% cash back on each purchase you make from eBay. I pair this up with my credit cards to gain anywhere from 4% (using Fidelity eRewards) to 7% total (using my Discover 5% online shopping rewards) cash back on my already cheap purchases. This article by eBay greatly explains how eBay Bucks works. Check it out if you’re a frequent eBay buyer! Here’s a screenshot of me earning $42.40 this quarter. I also had an additional $77.52 from last quarter. Unfortunately I do not have a screenshot for that one though. Although that adds up to an extra $119.92 on top of the cash back I already received and the profits I was already making reselling those DVDs!
The moral of this story is that credit cards can be bad, but it can also be good. As you can see I’ve gained $488.68 in extra cash simply because I used a credit card to buy what I was already going to buy with cash. I essentially received $600 in cash back total if you count the cash back from eBay this year! This is like investing in the stock market except you receive guaranteed gains for each purchase you make. You should be fine as long as you do not spend more what is in your bank account. I basically only spent what I could afford to pay off on my credit cards each month. Here’s my beginner’s guide to manufactured spending for anyone who wants to try it.
Interestingly enough, this cash back is actually a little bit on the low side in my opinion. It’s my fault for not applying to better cards with higher sign-up bonuses. In fact, I believe that there are currently 5 cards out there with $400+ worth of sign-up bonuses requiring me to spend $20,000 to gain a total of $2200. I plan on raising my credit score in the next few weeks/months in order to get the extra bonuses. I would have made around $1,300 worth of cash back had I used these high sign-up bonus credit cards I have listed here beforehand. I plan on writing another article next year to show you guys how it turns out.
Thanks for reading! Please feel free to leave a comment below if you have any questions on my math, my methods, etc!