When it comes to credit cards, most of us think of them as a way to get things we really want right now. We may not actually "need" these things, but we sure do want them. Whether it's a new couch, a new stereo or even a new wardrobe, we use our credit cards faithfully at the behest of our wanter. However, there is a common issue affecting most people in today's societies. Our "wanters" are out of control and they are wanting the wrong things. There is nothing wrong with having some new clothes, but there is a better way to use your credit cards that can actually result in you having more money.
It's time to take your "wanter" to task and retrain it. Instead of focusing on material things that you cannot do without right now, let's talk about focusing on your financial future. Credit cards can be, when used properly, a way to secure that future and open up new opportunities. Instead of wanting all of the latest gadgets, isn't it smarter to start wanting the things that really matter, such as more income coming in? By using your credit cards as leverage, you can actually start making more money with varing degrees of upside, effort, and risk.
There are numerous stories of film makers that used their credit cards to finance their little independent films. The films made it to the big festivals, got picked up by top distributors and went on to earn millions of dollars. Or better yet, how many Internet startups or online marketplaces have started with a found or three pyramiding their credit cards to retain a larger percentage of their company from the eventual venture capital backing... This is perhaps the best illustration of becoming wealthy using a credit card as leverage -- boot strapping a business venture.
Although not a sure bet that the films or the Internet companies would make it big time, the founders were confident in their vision, and with dedication to the respective businesses and a luck, it paid off. As with all instances of leverage, there is risk. If the business failed or the film flopped the personal credit of the founder would be on the line (with a business there really is no way around putting your personal credit on the line while your cashflow is negligible.)
We're not saying run out and run up your cards financing films or buying inventory for an EBay store. What we are saying is that by using that credit limit (how A Credit Card Limit is determined) wisely, you can start taking the steps towards some pretty nice returns. Pick the opportunities that best suit your skill set and risk aversion level.
A low risk opportunity is low interest balance transfer offers from your exiting credit cards or new solicitations. This is called credit card arbitrage. You borrow money from a credit card at a very low interest rate and you store the money in an interest bearing account. When the low interest period draws to a close you withdraw the money and repay the credit card keeping any interest earned. With interest rates lower than in recent times the amount of money to be made this way is negligible unless you have 50K+ in spare credit card capacity.
This is relatively low risk, assuming you pay the credit card back on-time and make the monthly payments. If you forget and miss a payment then you might lose all of your earned interest in a single rate hike and interest charge.
Buying stock on margin is another form of credit leverage. It uses stocks in your portfolio and line of credit to purchase more stock than could be purchased with just the funds on hand.
The key is finding that balance between willful and negligent spending and spending for the right reasons. If you don't manage your money properly, you're never going to get ahead. You'll always be treading water and trying to make ends meet. By being smart about your credit card expenditures, make more money than you spend. That way you can have the spare balance capacity to make money using credit cards.
Photo Credits: 1
Originally posted 2008-11-27 08:35:00. Republished by Blog Post Promoter
Related Posts -
Why is it Bad to Cancel a Credit Card? Unless the idea of streamlined credit you have in your head is having 8 credit cards in a single wallet, then chances are good that you have considered canceling some of the cards you do not use much. The truth about canceling credit cards: Do unused credit cards hamper you...... -
What You Need to Know Before Going Into Debt Let’s face it, if you want to get ahead in today’s world, you’re going to need to go into debt, at least a little. The key is managing your debt properly and avoiding common traps. Not all debt is bad, even if we have been trained to think that it...... -
Consumers Need to Exercise Caution as Credit Card Rates Climb Many consumers are finding that even though they have had the same credit card for years, and have paid the balances off completely every month, their monthly statements are suddenly appearing with a surprise: An interest rate hike by as much as three percentage points. Some consumers are not worried...... -
Learning About Hidden Credit Card Charges It is very tempting to get an offer for a new credit card with a low interest rate, but make sure to read the fine print on the application or you could find they are charging you fees that were hidden in the small print and that you are subject...... -
What is your Credit Card Costing You? Most people do not put enough thought into how much their credit cards are really costing them. Sure, you may think that you are aware of all of the costs associated with credit, but there are also a number of fees and charges that can go completely unnoticed among consumers......
Related Websites -
How to Repair a Ceramic Tile Roof Out of all the roofing materials you can use, ceramic tile is by far the nicest looking. Unfortunately, it's also very easily damaged and requires quite a bit of upkeep. For many homeowners however, this is a price they're willing to pay, given that the final product is so beautiful....... -
How to Start Coin Collecting The hobby of coin collecting often starts at a very young age. Children are fascinated by the different sizes, colors and feel of coins. If they show an interest in collecting coins, parents should encourage them to pursue the hobby. A child might start out by collecting coins from their...... -
Santa Teresa Golf Club Santa Teresa Golf Club is located in San Jose, CA Phone: 408-225-2650 Website: http://www.santateresagolf.com Course History: There are two courses, one is an 18 hole Par 71 and the second is known as "Shorty" and is an executive course with par 3 holes. Which ever course you pick to play,...... -
Free Skiing and Snowboarding Lessons by Okemo in Vermont for Month of December First time or beginner level snowboarders and skiers who are visiting the Okemo Mountain Resort in Vermont in the early end of the season have been invited to take part in a completely complimentary program for learning how to ski or learning how to snowboard at no cost at all....... -
Low Carb Dieting For Dummies By Katherine Chauncey Out of all of the low carb diet books out there, this has to be the most confusing. Normally, we steer clear of diets that are strictly low carb, since few are balanced, but since this was a book from the Dummies line, we thought it might be worthwhile. What......
- Balance Man New Hit Bg Shoes Running Deals
- Personal, Field Gear Germany Original Period Items WW II (1939-45) Militaria Collectibles
- College Football Cards College Trading Cards Cards Sports Collectibles
- Card Dealer Shoe Casino Collectibles
- Internet Businesses & Websites Businesses for Sale Opportunities
Categories:
Financial Security, Leverage, Money, Personal Finance, Stocks, business, credit card arbitrage, credit cards, margin
Tags:
2 comments ↓
This seams very risky, credit card companies are there to make money, so there could be hidden fees in arbrataging. Be sure to read all the fine print before you do it
[...] go back to when you first tried to get your credit cards. It was probably pretty frustrating, since you have to have a little debt if you’re going to get [...]
Leave a Comment