Credit cards have given me at least 8k of tax free money last year. If a PGY2 can do it, attending physicians can benefit much more by leveraging their 4-6x larger incomes.
1. Cash back from credit cards.
We all need to eat, so try your hand at buying your groceries, and in fact all your necessities, with a credit card with good cash back options.
While most people settle for cash back of 1-2%, with a little Google search, you can easily find cards that will give you 10%-30% cash back. For instance, I got 20% cash back from Discover IT and 10% off gift cards from Sprouts Farmers Market on 4k worth of grocery gift cards.
Right now, you can still manage 10% cash back from Discover credit cards. Sign up or find an even better card yourself.
2. Up your loyalty for even more cash back.
Banks like to have ALL of your money. So the more banking products you sign up and the greater your total assets reside in one bank, the more rewards you get such as better mortgage rates, faster turnaround time on your deposited checks, and greater percent of cash back associated with purchases.
For example, when I get my measly 1% cash back from my BOA cash rewards VISA card, I can receive additional 10% cash back on that cash reward by depositing it into my BOA checking account.
But when I have more than 20k in my BOA accounts, that additional 10% cash back jumps to additional 75%, which means each dollar I charged on my BOA VISA card, when deposited into my BOA account now earns me 1.75% cash back.
This can especially work to attending physicians’ advantage.
3. Fund bank accounts with credit cards.
Some banks allow you to open new bank accounts and fund these accounts with credit cards. I used to open Citibank online checking accounts and then fund it with my BOA visa cash back reward card. Each time I open a Citibank and fund 50k from my BOA credit card, I make $550 tax free money (because it is cash back associated with “purchases.”)
In 2015, I made over 3k with just over two hours of my time by opening a few Citibank checking accounts. What I love the most about this is that it’s completely tax-free. Not because I did anything, just because BOA credit cards processed my action of “funding Citibank account” as a purchase and cash back associated with purchase are tax-free.
4. Pay your high interest debt.
It’s tax free and guaranteed. I like being the bank and don’t like paying anyone interest unless I know I’m leveraging a debt for higher return on investment elsewhere. So if you have >6% interest rate debt such as student loans, I highly recommend that you pay it off.
When facing the pay down debt or invest, I’m somewhat of an extremist, I didn’t start my Roth IRA until I completely paid off my 6.8% student loans because I really liked the guaranteed ROI when paying such a high interest debt.
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All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.