If you’re still using cash or a debit card for your purchases, you’re potentially missing out on a lot of free money! As long as you’re spending money on the things you buy anyway, why not use credit cards that provides easy cashback or travel reward points on every purchase? And YES, credit card points is considered a creative way of earning passive income!
On a previous post, I’ve touched on what the differences between “active vs passive income”. But just a quick recap, Passive income is money you earn that doesn’t require you to do a lot of “active” work to continue making it. You’ve probably heard the expression, “make money while you sleep”, but in this case, you “make money while you shop!”.
If you’re good about paying your credit card off each month, use a rewards card for all of your purchases. It’s an easy way to earn a few hundred dollars (or more) each year, simply by buying the things that you’d buy anyway — such as food, gas and other necessary bills like your phone and internet bill!
Say NO to cash or debit!
We NEVER use Cash or Debit cards when doing groceries! Since you’re paying for groceries anyway, why not just put it on a credit card that earns you points? In this case, travel points (since we really LOVE to travel!) What good is paying cash or debit and get NOTHING in return??
While most people do prefer a Cash Back reward (usually 2% cash back on most credit cards), you actually get a bigger return (up to 4.5% in Canada) through certain credit cards if you opt for receiving TRAVEL rewards instead! So for those who has a lust for traveling the world, you can’t get any better than earning some 💰💰 in your travel bucket through some credit card points!
But for those who don’t really like to travel (which is okay too)… settling for a cashback credit card is FAR better than using cash or debit when shopping!
Taking advantage of credit card welcome bonus
When you sign up with one of these travel credit cards, they usually make it extra enticing by throwing you a bunch of FREE travel points to get you started on your travel saving journey! This is surely one of the simplest ways to earn “extra money” when you open a rewards credit card with an impressive sign-up bonus.
WE LOVE THIS A LOT!!!
These free welcome bonus points are sometimes just enough to pay for a few plane tickets and hotel stays in your family vacation! In fact, we ended up getting ourselves a completely FREE TRIP TO DISNEY WORLD for our family of 4!
We talk about this in our travel blog (onourlist.com) a lot but basically, we only used POINTS from one credit card to pay for our flights, one credit card to pay for our hotel and one credit card to pay for the Disney World park tickets themselves! We didn’t have to pay for much except for food!
If you are a couple, trying to make your vacation trips cheaper, this is the best way to do it! This will even expedite your travel savings if you and your spouse/partner each signs up for the same credit card! This should give you DOUBLE the welcome bonus points that you can combine together in most cases!
What are the best travel cards available in Canada?
Needless to say, there are a bunch of options out there but they normally change offers all the time! That said, for all offers in Canada, I love following Ricky from The Prince of Travel as this guy keeps up with the latest credit card offers in the market!
He is also one of the very few who perfected the “art of using miles & points” for all his travels! Not only does he use every single credit card point efficiently, but he also uses them to fly first class many times over! Have a listen:
Here comes a few caveats…
Of course, this post wouldn’t be complete without talking about some downsides to this.
1. Credit Cards might be dangerous if you don’t have the right discipline
While this all sounds fun and exciting, not so fast! Paying via credit cards can also be dangerous if you don’t have the right discipline & mindset and might even lead you to BAD DEBT! So in short, if you are not disciplined when shopping using credit cards (and truly only buying the day-to-day things that you absolutely need), this strategy might not be for you!
For this to work properly, you HAVE TO be paying off your credit card balances each and every month! As you know most credit cards charge 20% and up on any unpaid balances each month. So what would be the point of earning travel points if you have to pay 20% on your purchases to begin with?!?
2. Know the importance of your credit score
Signing up for credit cards can be quite easy, especially if you have a good credit score. But on the flip side, it can also be quite difficult to get approved for a credit card if you have a low credit score.
You can check your credit scores for FREE using Borrowell.
3. Find the right balance
Speaking of credit scores, signing up with way too many credit cards within a given period can also diminish and hurt your credit score. When you apply for a credit card, your credit score usually goes down, but I wouldn’t worry about this too much — because as time goes on, it slowly goes back up again. So it’s all about finding the right balance on things! If you apply 2-3 times in a year, in a span of 4 months apart, I think that’s okay! But if you have any unused credit cards in your wallet, I suggest closing them as they surely do no good for your credit score either.
My final thoughts
We’ve been traveling a lot as a family and as most of you know, traveling with kids ain’t cheap! We use these points A LOT and they make a BIG DIFFERENCE on our travel bills at the end of the day! This is why we really consider credit card points as a creative way of earning passive income! Because if you’re going to shop for things you need to buy anyway, you might as well earn some extra 💰💰 towards your travel bucket for doing so! Getting even just a few free hotel night stays can be an amazing feeling, as you stretch each dollar in your wallet! So stay disciplined and through this, you can surely take away some financial stress when traveling by using these credit card points!
Safe & Happy travels everyone! 😉
