Extra income from credit card rewards

February 22nd, 2009 · 1 Comment

I started paying pretty close attention to our GI-qualified income late last year.  And thus I can say that this month is already shaping up to be a bit unusual as we’ve had cash deposits totaling over $300 as a result of two credit card rewards programs.  Here’s the story so far.

image: http://www.freeimages.co.uk/

image: http://www.freeimages.co.uk/

Currently, we limit ourselves to using two credit cards.  We pay off the balance on both each month so we’re never carrying a balance nor having to pay credit card interest.   So why use two different credit cards then?  The primary reason is that one pays a higher cash-back rate than the other, but only on certain categories of purchases.   The secondary reason is that some cards are only accepted in some places.  For example, not everyone accepts an Amex card.  But on the other hand, some places only accept an Amex card.

For example, Costco only takes Amex credit.  It does not accept Visa or MasterCard.  We shop there quite a bit.  As a result, we went ahead and got an American Express TrueEarnings card for free as part of our Costco executive membership.  This is a combined Costco membership / Amex card which means we don’t have to pay an annual fee for the Amex part since we were already paying a fee for the Costco membership.  But this card also has some very favorable cash-back rewards that make us want to use it at more than just Costco.   We make a point of using this card to purchase all gas for our cars and motorcyles as it pays a 3% rebate, whether the gas was bought at Costco or some other brand’s stand-alone gas station.  We also always try to use this card when eating out as it pays a 3% rebate for those purchases.  And, finally, we use this card when paying for travel expenses as it earns a 2% rebate on those type of transactions.

So why do I say finally there?  Well for all other purchase categories, the TrueEarnings Amex only provides a 1% cash-back reward.   We can beat that with our FIA Card Services’s Fidelity Investment Rewards Visa Card (what a mouthful!) which can be used to get a 1.5% cash-back rate on ALL purchases.  Obviously, it’s a higher rate than the Amex is paying for all but gas, dining out, and travel.  Plus since it is a Visa, it is likely to be accepted everywhere the Amex isn’t.   As another nice benefit, the Fidelity Investments Rewards program lets you get your cash back whenever your points balance exceeds 5,000 points whereas with the Amex you have to wait until your February statement each year.

Luckily for us, we got both cash back rewards this month.   The Amex was automatic and our February statement came with a $250+ check that we cashed at the Costco customer service counter.  That money gets deposited into our GI fund for future GI investments.  Ka-ching!   And then in our February Fidelity Investments statement, I noticed our points balance had exceeded 5,000 points. As soon as I saw this, I went online and claimed a cash reward through their 1.5% exchange rate for cash deposited to a Fidelity brokerage account.  We had the $75 deposited directly in to our Fidelity My Smart Cash account and it cleared yesterday, after only 4 business days in processing.   Very nice, thanks Fidelity and FIA Card Services!   I’ve already gone online and transferred that money into our GI / passive-income holding account too.

Some people might ask why we count these rewards as passive income?   Well, since we’re getting this money simply as a result of changing how we pay for things we’d have bought anyway, we think it clearly qualifies as non-active income.   Which means it also qualifies as GI income.   As I wrote about awhile ago, we’ve purposely switched how we pay recurring utility bills by having them automatically charged to the Fidelity Investments card.  That decision definitely contributed to having reached the 5,000 point milestone so soon.   I’m looking forward to being able to cash those rewards a couple more times this year!

Tags: Credit Cards · Personal Finance

1 response so far ↓

  1. 1 Geographic Independence: February 2009 update | Geographic Independence // 2009.03.01 at 6:50 pm

    […] month’s $343-ish.   As I posted a week or so ago, the reason for the sudden jump is a couple credit card rewards hitting our accounts as cash this month.  Those rewards made up almost 57% of our passive income this month!  If not for these […]

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