How to Make Money (Thousands!) From Your Old Credit Cards

Credit cards are like a double edged sword. Use them incorrectly, and you can drown in debt for decades. Use them right, and they can pay you thousands, not only in reward points and cash back, but as passive income while helping others build their credit.

How it works

Imagine this. Joe is a prospective home buyer with a FICO score of less than 740. While he is pre-approved for a loan, the interest rate that was offered to him was higher than what he could have gotten if he had a good FICO score (740 or above). Assuming the interest rate for a person with good credit is 4.375% and 4.875% for someone with a score of slightly less than 740, the difference over 30 years (assuming a fixed loan) is over $30,000! What can Joe do? He can continue to work on building his credit score by himself–by making payments on time over an extended period of time (which could take years) before he can actually buy a house. Or, he can add himself to another person’s credit card account, one that has been opened for many years, with a large spending limit. By being added on to another credit cardholder’s long established credit line for just a minimum of two months, he is piggybacking on their credit and can boost his credit score, which could qualify him for a lower interest rate and save him thousands of dollars over the long run, in just a few short months.

There are a lot of people out there who pay hundreds of dollars for this service, which is known as selling tradelines or piggybacking. Some people have to go through this process multiple times because their credit score is so bad. By working with a company that acts as the intermediary that connects the person with the poor credit with the person with the established credit account, you, as the person with the established credit account, can get a small cut from that service fee.

How much can you make

How much you can make is based on how many tradeline spots you have available to sell. This is based on the number of credit card accounts you have, the dollar limit on those accounts, and the age of those accounts (how long you’ve had those accounts open).

Below is the payout schedule.
Credit Limit Card Age
12-24 months 2-7 years 8 years+
$5,000-$9,999 $50 $75 $100
$10,000-$14,999 $75 $100 $125
$15,000-$19,999 $125 $150 $175
$20,000-$29,999 $175 $200 $225
$30,000-$39,999 $200 $250 $275
$40,000+ Ask for quote Ask for quote Ask for quote

Let’s assume you make $150 per spot on average. If you have quite a few credit cards, you can sell between two to five spots per credit card. That’s hundreds of dollar that you would be making per month for just a few minutes of your time.

One person I spoke with, a forum moderator on one of the forums that I frequent, made $40,000+ in tradeline sales in one year, based on selling spots from both his and his wife’s credit card lines.

When I say “sell”, you’re doing nothing more than adding that person as an authorized user on your credit card account, which takes less than a minute of your time and can usually be done online through your credit card company’s website. The credit card will be sent to your address, under that person’s name, so the authorized user doesn’t actually receive it nor do they have access to your credit card account. (You can shred that credit card as soon as you receive it since you will never use it.) You’d keep that authorized user on your account for a minimum of two months, then the intermediary company will contact you when it’s time to remove that authorized user (about two months later).

Some credit card brands work better than others. Here are the credit card companies that work: Barclays, Citibank, Cap 1, Elan, Discover, USAA, US Bank and Bank of America. Like credit card churning, while it’s not illegal, selling tradelines is likely against the terms of the credit card issuer and you do run the risk of having your credit card account closed. It won’t affect your FICO score though, since that closed account will still show up on your credit report. I would know. I had one of my credit cards closed this way, but my credit score was unaffected.

It’s a nice side hustle if you’re looking to make some extra money. If you’re interested in getting the name of the reputable company that I work with (this industry is riped for abuse), just send me an email and I will share the details with you.

(Side note: Now that you know how to boost one’s credit score, if you have a family member or close friend who needs your help, you can just add them to your credit card account and allow them to piggyback on your credit line.)

What side hustle have you tried that has earned you some extra income?

3 thoughts on “How to Make Money (Thousands!) From Your Old Credit Cards

  1. Thanks for sharing. I’ve recently looked in to this and also found it is a nice way to make a decent amount of passive income. But I have yet to pull the trigger because of strong reservations.

    Although nothing that I have found says this is illegal, but taken at face value, is this not falsifying someone’s credit report?

    Example: Jane has good credit and sells her credit line (history) to John who has bad credit. John needs a loan. Lender ABS runs John’s credit report and makes a decision to lend him money based off of his, now, “good” credit.

    If I am misrepresenting the economics of the transaction, I do apologize, and hope to learn from a better explanation because it does seem worthwhile.

    Thanks!

    Like

    1. That’s a great question. According to one Federal Reserve report, “The practice of piggybacking credit has raised concerns that the credit scores of people with authorized user accounts may not accurately reflect their creditworthiness. For example, a study by Fitch Ratings (Pendley, Costello, and Kelsch, 2007) of mortgage defaults points to the presence of authorized user accounts on the credit records of high FICO borrowers who defaulted on their loans as evidence of poor underwriting practice by the lender. In response to concerns about the role of authorized user accounts in credit scores, Fair Isaac, which has traditionally treated authorized users and account holders identically, has revised the FICO credit scoring model to place less weight on those accounts on which an individual is an authorized user.” Keep in mind that a FICO score is just one aspect of an applicant that lenders look at during the underwriting process. Lenders also look at how much you make, your income source, payment history, etc. Furthermore, the FICO score is not a flawless system. It is a financial scoring system created by a private corporation. While there are valid arguments for and against the morality of piggybacking, I think if this practice really disrupted the financial industry, Fair Isaac would have done away with it (they could easily change there scoring system to remove any weight given to this). According to Thomas J. Quinn, Vice President of Fair Isaac, “After consulting with the Federal Reserve Board and the Federal Trade Commission earlier this year, Fair Isaac has decided to include consideration of authorized user trade lines present on the credit report.” I hope that answers your question.

      Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Create your website at WordPress.com
Get started
%d bloggers like this: