I have never been a proponent of individuals using credit cards unless they have a very good financial record and understand the implications fully. However, when used well, credit cards can be an effective way to get some returns on money we would be spending anyway. Small returns? Sure, but why not take advantage of it anyway?In a previous post about going to school for free, I described my company’s tuition reimbursement program. In another post about making money by going to school, I talked about using high textbook costs to one’s advantage. Here is how I used the program to partially fund a vacation. Once again, it’s pretty simple.
While in school, I got a credit card that returned points on money spent. For this card, it is 1.25% of every dollar spent, wherever you spend money. The school accepted payment by credit card, and I was able to rack up hundreds of dollars by using it to pay for all education expenses. Lets look at some math.
At my university, the per credit hour cost was $320.00. Classes are typically 3 credits each which brings the total cost per class to $960.00. Books and fees amounted to roughly $1,200 per year. So, if I took 10 classes per year (which I did multiple years), I was “spending” a total of $10,800 per year. At 1.25%, this equates to $135.00 per year in points earned on the credit card for education expenses alone. Again, this is not a huge amount of money, but it is there for the taking and all the little amounts add up. No matter what, I was going to spend that money anyway.
Here is some hypothetical math for visualization:
|Total Education Expenses Annually||Percentage returned by credit card||Total Amount Returned|
Some important things to remember:
- Credit cards can have an annual fee, this could completely erase the benefit if you aren’t spending enough.
- The credit card companies can be tricky about what you can earn points on and I recommend looking at this carefully.
- This is certainly not for people not confident they can pay the card off every month before it becomes due. However, in the case of employer reimbursement, that money should be coming in cyclically and regularly.
Lastly, I used the Capital One Venture One Card. Just for reference, not an affiliate link; in other words I am in no way promoting the card.
This is just another example of a way in which creativity in our financial lives and actively seeking out opportunities can be profitable!