You need to be using credit cards. It absolutely FLOORS me the amount of high earning professionals who use their debit cards to purchase everyday goods. It astounds me even further to see business owners do this.
Do you know how much FREE money and travel you can accumulate every year by using reward producing credit cards? We are talking about thousands of dollars of free money here folks… From an overall financial standpoint, you need to be using reward producing credit cards!
When you use your debit card issued to you by the bank, you are often times PAYING for the privilege of using it. Why? Because businesses are charged processing fees from merchant account service companies to process credit and debit cards. If these fees did not exist, then prices across the board would be 2-3% cheaper.
When you use a reward producing credit card, you are basically earning 2-3% of the money you spent back. Essentially, you are skipping this markup in prices. What does this mean? MORE MONEY IN YOUR POCKET!
I use credit cards for EVERYTHING. I would estimate that 95% of my spending is done through a credit card. I usually only use cash if I have too. I enjoy the free money given to me by the credit card companies, and so should you. Ultimately, it is the people that are paying the ridiculous interest rates from having piles of credit card debt who are paying you for being a responsible credit card user, but that should not be your concern.
Every time you use a reward producing credit card, you are basically getting 2% of the money you spent back. This might not sound like a lot, but when you add this up over the year, it can be pretty substantial. It becomes even more ridiculous if you are a business owner.
Lets run a few hypothetical numbers on how much you could be earning from a personal and a business standpoint:
Let us assume that you spend about $3,000 a month on personal goods and services such as clothing, food, utilities, etc. If you are using your debit card or checks, you spent exactly $3,000. If you use a reward producing credit card though with a 2% cash back incentive or double miles for every dollar you spend, you just go back $60 back.
$60 in credit card rewards x 12 months = $720 in free money or travel. Guess what? That is a free flight!
Now lets look at a business example using my Men’s Health practice. I typically spend between $8,000-$15,000 a month on my practices credit card. The majority of these expenses are from medications, supplies, labs, and utilities. These expenses are based off the amount of services and goods I sell, so the business covers them without an issue. For simplicity purposes, we will assume my Men’s Health practice spends about $10,000 a month on this credit card. I earn 2 miles per purchase (which is basically 2% cash back), therefore over a month I got back $200.
$200 in business credit card rewards x 12 = $2,400 in free travel. That is basically first-class round-trip tickets to Costa Rica for two people.
If you really want to dive deep into taking advantage of credit card reward points, there is a concept called “Credit Card Churning.” This is signing up for credit cards that reward healthy sign-up bonuses multiple times a year. Usually you need to spend $3,000 in the first 3 months and in turn, you will be rewarded with 50,000 free miles. The reward typically equates out to about $500. You were going to spend that $3,000 anyways, why not get a free $500 in the process?
I usually “churn” about 2-3 cards every year. I will spend the amount necessary to get the sign-up bonus and use the card for another month or two before signing up for another one. By the end of the year, you should have around $2,000 in rewards. Pretty cool huh?
I very rarely ever pay for travel simply by using credit card rewards instead of my own money. Check out the following credit card points I have amassed over the last 4 months personally and through a business card of mine:
This is over $3,000 in travel by doing nothing but spending the money I was already going to spend but on a credit card instead…
I plan on taking a week trip sometime in January or February. The flight and lodging will be free by utilizing credit card reward points. The rest will be paid through my businesses tax free because there will be some CME involved with it, which turns it into a CME vacation! Being a nurse practitioner entrepreneur is AMAZING.
Not only do credit cards benefit you by rewarding you points and cash back, but they offer superior identify theft and fraud protections as well. If your debit card is used illicitly, that money is automatically drafted out of your bank. Going through the fraud process with your bank can often times be a hassle. This is not the case with a credit card. Typically, all it takes is a phone call, and the problem is solved. Someone used my business card to buy a $6,000 plane ticket to Istanbul, Turkey last year… The issue was resolved in 5 minutes when I called my credit card company.
There is nothing magic about what I am talking about here friends. Every single person reading this can earn a FREE VACATION every year by doing nothing more than using a reward producing credit card for everything they purchase. This is even more true for the nurse practitioner entrepreneur. You will have a lot of business expenses running through your practice, so why not get some free travel out of it?
Now, stop reading the blog and go over to Capital One or Chase and sign up for a new credit card! You can get approved in a matter of minutes…
I can vouch for this and I’m not even a business owner … yet. I’ve been doing this for years and rarely pay for my flights!
Absolutely! I haven’t paid for a flight in years.
When you apply for a business credit card, do you apply with your personal social security number? I have personal credit cards but would like to establish a line of credit from my business.
Yes, you do apply with your SSN as well, it is used to run personal credit to ensure you are credit worthy.
Recommended business credit cards? Thanks!
Capital One Sparks