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Get Paid for Being Money-Smart

http://www.fool.com/how-to-invest/personal-finance/credit/2012/02/08/get-paid-for-being-money-smart.aspx

Dan Caplinger
February 8, 2012

The financial business is a dog-eat-dog world. So when companies decide it's time to fight for your business, it pays to play hard-to-get -- because the price financial firms are willing to pay to get you to become a customer has gone higher than ever.

Below, I'll share two tips that have earned me thousands of dollars over the years. But first, let's take a look at why financial companies are willing to be so cutthroat to earn your business.

Looking for the right people
More than anything else, what financial companies learned during the financial crisis was how much their best customers were actually worth to them. For instance, with credit card companies, as long as default rates were relatively low, they could potentially make a lot more money on interest charges than they ever could from interchange and merchant fees. As a result, those who paid their balances in full were ostracized as "freeloaders" who weren't paying their fair share for the convenience of credit.

But once banks had to start writing off those loans, the importance of a high credit rating rose dramatically. Suddenly, those freeloaders were valued customers again -- and rightfully so, given their dependability even in the midst of a tough recession. And with financial institutions trying to make the most of the new normal in the U.S., grabbing up those valued customers is worth paying for.

Get the credit you deserve
If you play your cards right, taking out a new credit card can get you huge rewards. Consider these current deals:

  • JPMorgan Chase (NYSE: JPM  ) is offering points on its Sapphire Preferred card that are worth $500 in cash or $625 in travel credits. All you have to do is spend $3,000 on the card in the first three months you have it.
  • Until December, Citigroup (NYSE: C  ) offered points worth $500 on its Thank You card in two equal installments, if you spent $5,000 in the first six months and another $5,000 in the next six months. That offer has now expired, but a similar offer gives you points worth $250 for spending $2,000 in the first three months.
  • Even smaller issuers sometimes make great deals. Pentagon Federal Credit Union, for instance, offers 5,000 points worth $50 on your first purchase, along with 20,000 more points if you spend $1,000 in your first three months.

It's true that opening card accounts with the intent of closing them soon after getting your rewards will hurt your credit score somewhat. But if you have flawless credit, then sacrificing a few points shouldn't cost you much -- compared to what you c