How to Make Money with Credit Cards.
Financially engineer to get the best out of your credit cards.
Let’s dive straight into the topic of discussion! A credit card (CC) is a must-have finance tool for working adults nowadays. It is no longer the symbol of wealth that it used to be. At the same time, just like any other tool, it could be a double-edged sword if not properly used; thus, be careful and wise with your CCs. Before we discuss how to engineer CC for maximum benefits; there are some very important rules to follow.
Rule 1 – Always pay off your outstanding balance EVERY month
Do not be so kind as to donate your hard-earned money to the banks as interest charges for late-payments and credit card balance charges. That’s the stupidest thing to do. If you can’t follow Rule 1, then stop, do not proceed further. Settle your current debts or reach out to us if you are currently struggling in debt.
You see, CC is a tool. If you use a tool correctly, you will then benefit from it. The same thing for CC, use it wisely, and you will reap the benefits later on. Still, if you foolishly burn it on an easy payment plan and spend beyond your means, you will get nothing but shiok sendiri sensation (owning a toy or going on a vacation you can’t afford) temporarily while spiralling deeper down into debt.
Rule 2 – Cheap is not always bad; Expensive is not always great. FREE is the best!
Always go for FREE FOR LIFE (Without any conditions) credit cards unless it is worth paying for them. You do not want to be spending your time checking whether you swiped X no. of times to fulfil the waiver criteria or calling the bank every year to ask for a fee waiver. Keep it simple and get a FREE for Life CC.
Rule 3 – Always read the terms and conditions of the benefits of the CC
As the saying goes, the devil is in the detail! Don’t be fooled and cheated by the bank’s promotions and marketing gimmicks without going down into the details of the terms and conditions of the benefits of the CC.
Defy any of the rules above; you shall perish at your consequences!
Now we have set the ground rules, let’s get into the hacking part. How to pick the right card for you? Most people will go for a cashback card that gives a certain percentage in cash backs. Often, there will be lots of TnC that you need to fulfil to qualify for the cashback.
We want to keep it simple and pick a few cards that give cash back for most transactions (optimisation-get more with less). Here is an example:
Card No. 1
Maybank 2 Card Gold/Platinum American Express (AMEX)
Note: Use only the AMEX card, you can keep aside the Visa or MasterCard as the benefits are not great.
Card No. 2
Public Bank Quantum MasterCard and Visa – You will get 2 cards
PB Quantum MasterCard
PB Quantum Visa
Card No. 3 – For Petrol
Maybank Islamic MasterCard Ikhwan Gold Card
Card No. 4 (Optional) – If you shop at AEON
AEON BIG Visa Gold
How do you work things out?
The idea here is to convert and match your current expenses with the right credit card. Here is an example:
Theoretically, per year you can earn:
PB Visa = RM360 for Paywave transactions
PB Master = RM360 for Online transactions
AMEX = RM600 for weekends transactions
Total = RM1320 in cashback
Let’s look at an example of monthly spending.
|Item||Expenses||Amount (RM)||Card Cashback (RM)|
Monthly Cashback = RM95
Yearly Cashback =RM 1140
Cost = RM 25 (SST)* 4 cards = RM100
Nett Cashback = RM1140 – RM100 = RM 1040
As you can see, RM1000++ per year is not going to make you any wealthier but it’s FREE money from living your daily lifestyle so why not. But remember, true wealth is built through investments that grow exponentially over time and not by collecting cash backs.
There is no one right card, but it will be great if you could get the best of everything in one or 2 cards that you are holding. Let’s say if you are a movie junkie, it’s good to have a card that gives you fantastic movie ticket deals like the Hong Leong GSC card. Anyways, whichever card you are holding, always remember the 3 Rules and pick cards according to your lifestyle needs.
I hope this guide is clear and helps you in optimising your cards.