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I have read some amazing stories here about how members were able to leverage credit cards to generate wealth. I need information about the different starategies members used to leverage credit cards to generate wealth. Any information would be appreciated.
1. Generating wealth with CCs...as in planting a seed and turning it into a small orchard? That might be tricky. A business or investment may need many years to succeed (*it can also fail miserably!*), and credit cards rarely give more than a year or two at 0%. After that, most have high interest rates.
Few businesses or investments can out-earn a lot of high-interest-rate debt. An investment with a little high-interest rate debt, or one with a lot of low-rate debt, can prosper more easily than one with a lot of high-rate debt.
2. Using existing wealth to make CCs better, and vice versa? That's another matter. It's not hard, but it requires a small and healthy "orchard" to begin with!
In that second category, one popular strategy for the self-employed and those with investment income is to use make tax payments by credit card. Some cards give rewards that exceed the card processing fees (which are in the ballpark of 2%, but vary depending on the service and state/local agency). It also gives additional time to pay because they can keep the money until the CC payment is actually due (without interest). Maybe the account also has a 0% interest period. Bonus chasing is also popular, either with a new account or in earning a credit card retention or other bonus.
I had unusually high investment income in 2018 and I did all of the above.
One limitation is that a lot of the nicer bonuses are for travel, especially midprice-to-luxury travel. If you'd otherwise be spending money on travel, cards can save a lot of cash (that can be invested elsewhere). But if you would otherwise be working or staying home, there are fewer great bonuses.
@iced wrote:
Do you have any references to posts here that claimed success stories? I don’t recall anyone here doing anything beyond a few hundred here or there, which is not building wealth even by loose definitions.
In general, leveraging credit cards for investing is a very bad idea. Even 0% offers are too short of a time frame to do much that isn’t considered speculation and any loss is only going to be compounded by the high interest rates.
Leverage a mortgage? Perhaps. I could possibly even entertain a corner case with a low interest car loan, though that’s a stretch. But credit cards? That’s asking for trouble.
And there's also the question of how much you could actually borrow. It can be hard to get big CLs without already having a high income. All risks aside, $5k at 0% is good for someone paying off other CC debt, but is too small to make much difference to an investor.
@Anonymous wrote:I have read some amazing stories here about how members were able to leverage credit cards to generate wealth ...
Somehow I've missed those. Links please.
Be gentle. OP is new and probably misunderstanding a lot of things. Lets not scare them away, please.