A few years ago, making money from credit cards was relatively easy – many credit card providers had 0% deals which lasted for a long time and many people took up the offer, withdrew up to their credit limit on the card and put the money into a high interest savings account for the duration of the introductory period. When the 0% deal ended, they switched to another card with a 0% introductory deal and repeated the process, netting lots of interest in their savings account.

However, too many people started to ‘tart’ their cards and providers got wise. Gone are the days of 0% interest for two years but does this mean you can no longer make money from credit cards?

The answer is ‘it depends’. Credit card providers have made it harder to make ‘easy money’ from them. 0% introductory offers are a lot shorter than they were two or three years ago and many card companies have introduced balance transfer fees to stop the credit card tarts. Some also only apply the 0% offer to actual purchases so withdrawing the money attracts instant interest fees with no 0% offer. To make matter worse, withdrawing cash will often attract a higher APR than purchases anyway – sometimes rates are over 20%.

The plan of action
If you are planning to try and make money from your credit cards, it is only worth it if you have a large credit limit otherwise the returns are not worth the effort. You will need to open two cards – one to transfer the balance from and one to transfer the balance to before moving it to your savings account. You will need to check that the balance transfer fee is low too – an uncapped fee is best.

Choosing the longest 0% balance transfer period isn’t always the best option – finding a capped transfer fee can sometimes make you more money. You need to work out how much the balance transfer is going to cost you versus the amount of money you will make from the deal. Remember that each month, even though you are on a 0% deal, you will need to pay some of the money back so this must be factored into your equations.

Savings choice
Choosing a savings account is also key to making money – some people opt to go for an offset account against their mortgage as mortgage interest rates tend to be quite high. Others just go for a high paying savings account. Remember that you will need to take tax on your savings account into account when planning whether making money from credit cards is the option for you.

Discipline
As with any credit card, discipline is the key and you must ensure that you pay the entire balance of the credit card off with your savings as the 0% deal ends otherwise you will negate all your hard work having to pay interest on the credit card balance. If you are planning to shift the balance to a new card make sure you apply in good time so that you have the new card in good time. If you aren’t planning to use the old credit card again, make sure you close the account down – having too much credit can sometimes adversely affect your credit card rating.

The Alternative
If tarting isn’t for you, there are still ways of making money from credit cards. If you spend a lot of money on your plastic, look for a card which pays you cashback. At the end of the year, the card will send you a percentage of the total amount you have spend on the card back – the way that the money is given back to you depends on the card; some will give you vouchers, others a cheque. Check the terms and conditions carefully.

As with all credit cards, it is important to try and pay the full balance back each month otherwise the interest that gets racked up on the card will negate the cashback that you receive.

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