Passive Income Hacks - Cash Back Credit Cards

I recently learned about a Visa Infinite credit card which gives 4% cash back on any monthly recurring payments that are set up to be paid with the card, so I signed up. Here's how I use it as an additional passive income source.

I remember the first credit card I ever got was a General Motors Visa card. I didn't choose it for any reason other than that was the card the financial advisor at the bank presented to me when I inquired about getting a credit card for the first time.

I wasn't familiar with credit cards perks back then, but this card's perk was that the more purchases I made with the card, the more points I got. These points could then be redeemed for a discount on the purchase of a GM vehicle.

Funny thing is, back then, I had no plan on buying a car whatsoever. At that time, I recall Japanese cars had started generating a buzz for their lower price and better reliability. So even if I thought of buying a car, I wouldn't have considered one by General Motors, regardless of how many GM Visa points I acquired.

So for the duration of my ownership of that credit card, I completely ignored my points balance. And when I cancelled my credit card, I forfeited the points I acquired without a care.

Years later I learned about cash back credit cards. I couldn't believe a credit card's perk would be to pay you back for a portion of any purchase you made, rather than give you some useless points.

Now, I love cash back credit cards, and I've included the yearly cash back payout as one of my passive income sources. I'm not sure if everyone would consider this to fit the bill for "passive income", but I consider any money that I don't need to exchange time working to acquire as passive income.

That first cash back credit card I learned about and started using gave 2% cash back.

After years of using that card, I just came across a 4% cash back card, so I signed up.

Here are the cash back percentages:

One of the ways to get 4% cash back is to set up recurring payments to be paid with this credit card.

Since my previous card was giving 2% on recurring payments, I changed the credit card on file for all my recurring payments to be paid using my 4% card.

I also did the math on just 3 of my recurring payments to see how much cash back I'd get:

Car insurance = $254.75

4% of  $254.75 = $10.19 cash back per month

$10.19 x 12 = $122.28 cash back per year

Home TV + internet bundle = $124.19

4% of  $124.19 = $4.96 cash back per month

$4.96 x 12 = $59.52 cash back per year

Cell phone = $32.77

4% of  $32.77 = $1.31 cash back per month

$1.31 x 12 = $15.72 cash back per year

Total yearly credit card cash back = $197.52

So almost $200 is paid to me yearly for just 3 things that I would be paying for regardless. And that doesn't include the additional cashback on countless other purchases I'll be doing.

AND that doesn't include this special offer the card gave when I signed up:

In November 2019, I was paid $333.95 in cash back for the year, with the 2% cash back card I was using. And that was after a few months of heavily reduced credit card usage during that year, while I tried to figure out my credit card statements.

I will now resume utilizing my credit card for all purchases, and look forward to seeing how much cash back I'll be receiving at the end of 2020.

Photo by Dmitry Demidko on Unsplash