How I Made $1,399.90 With My Visa Card

Back in December of 2008, I wrote a post explaining why you should never live on cash. The post was met with a lot of comments saying I’m wrong and credit cards are bad because they are too easy to abuse. I say you’re just not a financially responsible person if you live on cash.

Paying With Cash Cost You Money

Whenever possible, I will charge everything I buy on a credit card. The main reason for this is because it makes me money. If you’re the kind of person who never runs a credit card balance and always pay off the full amount owed every month, then you should never use cash to buy anything. Instead, use a rewards credit card that will pay you to use it. My TD Visa offers cash back on anything I charge. However, there are reward cards that offer travel points, discount on cars, gifts, etc.

You’re going to buy that grocery anyway. Instead of paying cash at the Whole Foods and just getting the grocery, put it on your reward credit card and get some cash back or earn some points towards a nice vacation. Over the course of a year, the reward can add up to a substantial amount. This is the check TD Visa recently dropped off.

Visa Dividend Cheque

The amount represents my “cash dividend” for 2009. My visa card gives me 1% cash back on anything I charge to it. Those who are good at math will be able to work out that in order to receive a $1,399.90 dividend, I would need to charge $139,990 to my Visa card in 2009. That brings up the question, what the hell did I buy?

What I charged to my Visa isn’t the point. The point is, had I paid for those purchases in cash, I wouldn’t have received the Visa dividend. While 1% doesn’t sound like much, over the course of a year, it can add up to a nice night out on the town. Now some people living on cash may say that if I flash cash, I could get a discount bigger than 1%. In cases where a merchant offers a cash discount, I take it and don’t use the Visa. For most merchants however, flashing cash won’t give you any more discount than flashing a Visa.

Cash Is Bad, Credit Is Good

It’s amazing the number of people I’ve met who tell me to live on cash because credit is bad. The only thing I have to say to them is they don’t know how to manage their money. If you’re the type of person who shops impulsively and doesn’t keep track of your spending, then a credit card is probably not for you. However, if you always live within your means and always pay off your credit balance in full every month, then a credit card is a great financial tool and one that will make you money.

A cash back or reward credit card doesn’t work if you don’t pay it off every month. The interest on the charges will more than kill off any rewards you can ever get. I’m happy to report that even though I’ve charged $140K last year to my Visa, I was able to pay the balance off every month and incurred zero interest charges.

Now I just have to figure out what I’m going to do with this dividend check. 😀


67 thoughts on “How I Made $1,399.90 With My Visa Card”

  1. Nice work John! What type of a limit do you have to be able to rack up $140k? And good work not paying any interest!

    1. He obviously has a pretty high limit.

      1. Wonder if he bought his house on another credit card we don’t know about. Haha

        1. I do not think that you can buy real estate through credit card.

          But yes credit also involves their and in this purchase you will have to pay money in the form of interest.

          So for buying real estate I would prefer my bank account to take care of everything.

  2. Colin Dean says:

    Using credit cards for everything really is the way to go. I honestly have fewer than six transactions per month which come out of cash or direct debit–three of them are credit cards, and one is Costco, which doesn’t accept Visa (I’ll likely get an AmEx if I ever actually join Costco).

    I’ve been doing this for ~3 years now. I’m a recent college grad and I never carry a balance.

    The best deal around, at least in the northeastern US, is the BP Visa. 5% back on BP gas (and they’re everywhere), 2% back on dining/entertainment, and 1% back on everything else except competitors’ gas–that’s where my other cards come in.

    Southwest Airlines’ Rapid Rewards credit card is also really good. I put less than $4000 on it–money which I would normally spend–and did so at certain points and places. I got a free flight inside a year of having the card, plus had my annual fees waived when I complained because they didn’t say anything about them when I signed up.

    1. Occasionally I use cash on vacation, but I almost never use cash in the town I live in.

      1. Cash on vacay is the way to go!

        1. You mean on vacation you carry cash, that one is really risky business my friend.

          Don’t you think so ?

  3. Gregg Gordon says:

    I’m on a very limited budget, but still follow this rule. My credit card gives me 1% towards tickets booked through iTravel2000; better than a normal travel rewards card because I use just what the absolute best price is (they price match), so I have no restrictions and have flown to Cancun using just $69 + tax out of my rewards balance.

    On a very limited budget, I have already saved up more than John’s cheque, though it took several years. I use such strategies as going online to pay my cable bill, but paying it via credit card and then going to my banking site to pay the credit card. Extra step to pay the bill, but I get the reward!

    1. Our State Farm Visa card pays for the insurance on one of our vehicles every year. That’s the reward we get.

      1. With that how much you are saving ?

  4. d3so says:

    Thanks for enlightening me. I never knew about this and unfortunately I’m one of those who look down on credit cards. But no more! You’ve made an interesting point and I’ll definitely be using a credit card for my small purchases.

  5. Wow, you did buy a lot of stuff with your Visa card this last year.

  6. Smart stuff! The only thing I need to do is make enough money to pay off my master card.The first part is already working for me….

  7. Diabetis says:

    I never use any credit card simply that I don’t the documents that they want.

    1. I do not think that they have any special requirements.

      But its totally depend on the country which you live in.

  8. I’m guessing that $140K charge was for PPC advertising. If I am correct, I think John is paying off his PPC debt at the end of every month and using part of the money he made from his ads to pay off the card. But I could be wrong 😉

    1. Brian says:

      I am guessing most of that $140K was spent on those fancy restaurants he goes to all the time and then blogs about, which makes it a business expense that he can then deduct from his income tax.
      John definately maximizes every dollar he makes.

      1. As far as I know he got sponsored every time he go to restaurants.

        Even while eating he can arrange sponsored.

        John is really sharp.

  9. Tim Paulino says:

    I agree John. Another good reason is most credit cards offer buyer protection on a lot of items. So you’re protected better when you pay with credit on certain purchases.

    I use credit for everything, but cash flow needs to be good enough to pay off the balance. If you don’t, then interest eats up any rewards you might earn. Additionally, you can’t be late with payments. Just one late payment can jack the rate on your card up really high. Make sure you setup some sort of automated payment program that will automatically pay your minimum payment in case your ever late. That can save tons in fees and interest.

  10. This post goes against everything I’ve learned yet it sounds like a pretty smart idea.

  11. nucksfan says:

    Good advice John.

    I have the 1% TD Visa cashback as well but since my Amex has 2% cashback with no annual fee I use that more often, it’s just too bad Amex is not widely accepted here in Canada.

  12. In the past I had made lots of money by borrowing at 0% (with $100 cap as cash advance fee) and earning at 5% from online saving accounts, Government bond, etc.

    Right now it is not possible because bank saving rates are extremely low and credit card companies have removed the cash advanced cash.

    At point, I had $100,000 borrowed from my credit cards to earn money.

    In one year, I remember I earned close to $5,000.

    Even the cash advance fee was tax deductible as Investment expenses.

    Credit card rules. Never use cash.

  13. Derek Clark says:

    I’m gonna have to be the dissenting opinion here. Studies have shown that people spend on average of 18% more when spending on credit as opposed to spending with cash. Last time I checked 18% is more than 1%.

    1. John Chow says:

      Studies also show that 50% of all credit card users pay off their bill every month and 100% of the of the people who spend 18% more when spending on credit are part of the 50% that don’t pay off their credit cards every month. But I really can’t feel sorry for the 50% who don’t pay their bills every month and incur interest charges. After all, they’re the ones who’s paying for all the cash back and trip points for the 50% who are financially responsible.

      1. CNA training says:

        My take away from this post is that If you are financially responsible, then go for credit. If you need financial responsibility forced on you then go with cash

        1. Tim Paulino says:

          I agree with that.

  14. Steve C. says:

    I use cards for everything. Not only can you track everything but if you lose your wallet you just call the bank and get a new card. Any unauthorized charges are refunded back to you… something you can’t do with cash.

  15. If I only had $100,000 to spend in credit I would be good to go.

  16. That is pretty interesting to think about. My wife and I have an American Express card that we pay off every month that pays us to use it. That’s impressive that you charged so much and were able to pay it off as well.

    Now to see if there are reputable cards that pay more than 1% 🙂

  17. Kel says:

    John,

    You aren’t totally correct on this. You can’t compare yourself to others. If you can spend $100000+ on a cc, then there shouldn’t be a problem paying the bill off. You are out of the league of many

    Us average Joes that live month to month, well we can put something on the CC and then an unforseen expense comes and we’re stuck.

    I agree buy everything on CC, I try to do that as well, but 1% of $12,000 works out to $120 a year and that’s not a lot of money so I pay cash often so there are no headaches.

    1. CNA training says:

      What would you have done about the unforeseen expense if you had used cash for the first purchase. What I am going to is buy stuff on credit and immediately transfer an equivalent amount to a separate bank account. That will help me be more responsible till I internalize it.

  18. some cards even provide 5% cash back

  19. 5% cash back on pharmaceticals and groceries in some cards….check your card regularly for offers

  20. after long time i see Google Adsense Ads..)))))

  21. Divena says:

    1% is not much when you spend about 500 € per month over your creditcard. The thing is “normal” people would never get such a high credticard-limit…!

    So what do I do with my 5 €? Hm…

    1. CNA training says:

      I think it is more about the attitude. I had read some where that people who are rich are the ones who respect each dollar. John goes on to prove that point. 1000$ for John is as big as 1$ for me. Still he cares..

  22. Gary Ginn says:

    I have a 1% rebate Visa card as well from TD but I don’t receive a check for my 1%. It was just deduced from my final months visa bill. Perhaps it’s because it’s no where near as much as $1399.90? Haha!

  23. Rinaldi says:

    I see you know how to use a credit card. If everyone did what you did then they would get a gift like you. The problem here is not everyone using a credit card and can pay on time or even can not pay.

  24. fas says:

    Everyone is wondering what did you buy :p

  25. you are right as long as you pay it in first month.

  26. Paul B says:

    I just bought a new oven (yesterday actually). Cost was $650 in the shop. I was going to pay with my card but thought I’d try my luck for a cash deal. Got $80 off. Paying with my card (if it had 1% cash back, which it doesn’t) would have made me $6.50

    Surely it’s better to use the best payment method depending on the individual situation?

  27. TechOfWeb says:

    question still exists John.. what u bought of $139,990 ? 🙂
    Anyways this thing of buying with credit cards may ne feasible to those who spends more but for people who spend less money can end up in losing money with credit card due to transaction charges etc..

    Atul

  28. Andrew says:

    I used to be like you John, buying everything on credit in the UK and paying it back each month.

    But now I am in Japan, they use 99% cash and I have recently jumped through all kinds of hoops to finally get a Debit Card so that I can open a PayPal account in the local currency.

    I think the high volume PPC crowd use a plum card to fund their high daily spend on PPC and pay it off from the profit, or get incinerated at the end of the month if the campaign failed.

    1. CNA training says:

      That sounds too dangerous to me. Using credit card on an activity the return of which you are not sure of. That can ruin you financially.

      1. Paul B says:

        That’s just the way the big ballers and super affiliates roll! If you can’t stand the heat stay out of the kitchen, are you a man or a mouse?! 😉

        I prefer to spend my own money so I’m with you.

  29. marita says:

    That’s why we love your blog John – you know how to play along with the system! I’ve always taken advantage of the perks credit cards offer; I’ve even put some of my last car purchase on my credit card! Not everyone will let you do it, but you can make it a part of negotiations. I also put my cable and internet bill and my phone bill on credit cards every month – a no-brainer since you’ve got to pay it anyway.

  30. Congrats John!

    When are you going to be eligible for the Centurion card 😛

    1. John Chow says:

      I don’t find the perks of a Centurion card to be worth the $2,500 a year cost. The only way I would get it is if someone got one for me and pay the off the bill every month. That’s how Neil Patel got his.

  31. Makes sense. I have found with my Credit Card that airmiles was the better option instead of the cash back. Then the end of each year I change the airmiles in for gift cards to groceries or zellers where I will always use them. I seem to get more “cash back” this way then I would with the actual cash back option.

  32. People who only use cash also have little chance to build their credit scores. When the time comes that they need credit (to buy a house or car) they’ll have a harder time finding a lender or get a terrible rate because they have no established credit.
    It seems stupid, but my wife and I have been fighting that problem for a year since she has no credit. Even with a solid credit score on my end, many lenders refuse to lend to us because she doesn’t have any. No credit and bad credit are almost the same.

  33. As I hit post, I had a second thought as well. With the new credit card bill that just went into effect on Monday, a lot of credit cards have greatly increased their annual cost for reward/cash back programs. Before you jump in on one of those programs, figure out your spending to see if it’s worth it for you. If your card costs you $40/year and you don’t spend $4,000 on it (college students?), then you’ll lose out.
    Also, if you’re married watch out if you both have annual charge cards. My wife and I just got hit with a double annual renewal, but we almost never use her card. Just get one and try to always use that one for major purchases, paying bills, etc..

    1. John Chow says:

      All good advice right there.

  34. Keron Calame says:

    Hey John! Why did you hide your Middle name, do you have one of those middle names that ppl aren’t proud of lol, Nice post! I never really look at things like this, and don’t think i will but Nice post!!

    1. John Chow says:

      My middle name is just my Chinese name and the main reason I black it up is because my brand is John Chow and I want to maintain the brand.

      1. Fique says:

        Branding is so important to you John?

  35. Faizan says:

    I think the key is paying your dues within the time limit and buying only what one can afford. If this is done, then credit card is a great thing to use.

  36. The credit cards companies sure make it attractive to have their cards in positive balance, but how many people can actually get that right?

  37. Josh says:

    John, great article. My wife and I recently did something similar with our MasterCard. With the airline miles we’d accrued, we only had to pay the tax on 2 tickets to Germany.

    http://www.janicek.com/archives/2010/02/27/how-were-flying-to-frankfurt-for-136/

  38. penny saved is penny earned

  39. Dade says:

    On a similar note John, I started using my airmiles card last year just to see if I was actually missing out on anything. I tried a little experiment. I was already using BMO for my banking, so all I had to do, was start buying my groceries at safeway, my fuel from Shell, and since I work at Hbc, I had them convert my Rewards points to airmiles automatically at the end of each month. Hmm…. I never realized all the things I was missing out on absolutely free. In that year, I was able to take myself and my girlfriend to the zoo twice, went to the Drumheller museum twice, bought Theatre Calgary tickets….. yep twice, ordered $80.00 in Gas coupons from Shell, and ordered about 10 two for one movie passes. All this for doing nothing more than flashing my airmiles card at places I had to shop at anyway!

    Gotta love that free stuff! 🙂

  40. Payment through credit card is good but you should be addict to shopping and should always pay your dues on the due date to avoid any kind of late fee.

  41. Lulu says:

    I completely agree with you about getting cash back for using your credit cards. It takes discipline to do that and not pay interest but if you plan your purchases and pay them off why not make money off the CC company.

    Good job….but could you not have gotten even more than 1%. I know Discover gives a rotating 3-5% on gas at times.

Comments are closed.