If you’ve ever read about any millionaire, you’ve noticed that they’re able to generate multiple streams of income. This simply means that they make money more than one way. On top of that, being able to generate multiple streams of passive income is even better. Passive income is money that you make without doing anything. A simple example is making interest off of money that you have in a savings account. But if you are a person that only has one stream of income, you can use cash rewards credit cards to easily generate a second stream. Remember, I am not an advocate for using debt. However, if you have the discipline to pay off your credit card balance at the end of every month, you should consider cash rewards credit cards.
What is a Cash Rewards Credit Card?
A cash rewards credit card gives you cash back every time you use it to make a purchase. It is very common to see cards give you 1.5% of your purchase back. So if you make a $10 purchase, you will get 15 cents back. This may not seem like much, but if you consider how much money you spend on a yearly basis, it will begin to add up. Credit cards vary in the percentage that they give back. You should look around and see what card is ideal for you. You will find cards that offer higher percentages for specific kinds of purchases. For instance, some cards will offer 3% cash back on gas purchases, 2% on grocery store purchases, and 1% on any other purchase. This is just an example but you get what I’m saying. The amount you get back will vary from card to card, so find what works best for you. You can compare different cards here at BankRate.com.
What Should I Do With the Cash Rewards?
The answer to this question depends on your current financial situation. If you are loaded with debt, I would put the cash rewards towards paying off that debt. However, if you have a ton of debt, I wouldn’t advise you to open another credit card and incur more debt. If you’re debt free but don’t have an emergency fund, you can put it towards your emergency fund. If you’re debt free and have an emergency fund, you can put it towards your retirement or invest it in mutual funds. However, the last thing I would do is spend the money. If you spend it, you’re wasting your new stream of income as opposed to making it work for you.
Remember, every millionaire has multiple streams of income. A cash rewards credit card may be a good idea for you if you want to generate another stream of income. However, DO NOT use a credit card if you don’t have the discipline to pay it off completely every month. Look around and find what card works best for you. And finally, put the cash that you get back in a place that will make it work for you! Don’t just waste it. I hope that you found this post useful. Please comment and leave some feedback. Thanks for reading!