Let me say this right off the bat; credit cards are trouble. The average American has credit card debt of $8,000 (some contend it’s closer to $2,000) while the same average Americans have a negative savings rate. This means a whole lot of people are out there buying stuff they simply can’t afford.

Credit cards are the worst possible financing option available. Credit cards are high-interest loans. Can you image financing a car at 18% interest? But people finance much less significant purchases at these kinds of rates every day. It might be cheaper to borrow money from the mob than to pay those ridiculous double-digit interest rates our friendly credit card companies charge. Add finance charges and late fees on top of that, and you’ve got yourself a serious financial problem.

You’re not reading this post to hear about the evils of credit cards, are you? You want to know how to profit from your plastic. We’ll here’s how we do it. My wife and I have accrued 81,000+ rewards points on our credit card without carrying a balance or incurring interest fees and finance charges. I’ll be redeeming those points for free airfare and hotel rooms on our upcoming anniversary. Cha-ching!

People in debt:  the credit card companies are playing you. They own you. You are their slave.
Here’s how you make them pay.

1. Transfer your high –interest debt to a no-interest credit card. Open that no-interest-for-12-month card but don’t use it except to finance your old debt. This is just a place to park that debt while you pay it off. In fact, cut up the new card and melt the pieces in the microwave.
2. Set up an automatic bill payment for the no-interest card at 1/12 the total amount owed. This is important. Get the debt paid off in the 12 month grace period and do not miss a payment. If you do, then you’ll get stuck with the interest and finance charges, which defeats the whole purpose.
3. Cancel the old card.
4. Open up another card that pays cash rewards. This is separate from the no-interest account. You’ll earn a few pennies for every dollar you spend and those pennies add up.  Don’t keep multiple cards active, they’ll just diffuse your rewards earnings potential.  You just need one card.
5. Use your rewards card for all your essential purchases. We buy our groceries, fill up our cars, and pay our utilities with our one rewards card. I tried to pay my mortgage with it too, but that wasn’t an option for me. Maybe it will be for you. This is a method to ramp up your rewards earnings without buying frivolous junk.
   If you’re really savvy, set up all your bills to be paid online automatically using your new rewards card and then just pay your credit card bill for everything.
6. Pay your balance in full every month. This is non-negotiable. If you cannot pay the whole balance every month, then you shouldn’t be using the card at all.
   Schedule an automatic payment from your bank account to your credit card on their website. This will prevent you from forgetting to pay on time. Oh, and make sure there’s enough cash to cover it.
   See how that works:  use your rewards card to pay your bills online then use your online banking account to pay your credit card bill. No late fees and no stamps. Simple and quick.
7. Watch your rewards pile up!

Disclaimer: if you’re a slack and have a hard time making your payments on time or can’t afford to pay the bill off in full each month (you have no excuse), then this plan is not for you. The costs of late charges and finance fees far exceed the benefits of the rewards program; they know that and they’re willing to bet you don’t. But if you can be sage about this, pay on time and pay in full, you’ll steal a little extra change out of the devil’s own pocket.