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Tax-Free Cash Rewards From Credit Cards

Whenever I speak to an organization if I mention you can travel for free or get $10,000 or more per year tax-free, I am always asked to come back and speak again on this single topic. It is incredible how many people either don’t know or don’t use on a regular basis what I am about to reveal. I am talking about tax-free money just for the asking and every kind of free travel imaginable.

A lot of people opt for the travel benefits because they enjoy traveling and the benefits are usually worth a bit more if used for travel. For me, cash is king. I like money, especially when I don’t have to report it as income.

Responsible adults should have no problem using credit cards to their advantage. We do NOT recommend carrying a balance on a credit card ever! The above statements about free travel and tax-free cash are available using credit cards and to a lesser extent debit cards. At the bottom of this post I will provide links to a list of credit cards with a variety of cash and travel bonuses.

Where Is the Tax-Free Money Hiding?

Before we begin I need to outline what is and is not taxable. Bank bonuses where you deposit money into a checking and/or savings account for a certain period of time for a bonus, say $250, IS taxable as interest income.

Credit cards are different. There are credit card companies willing to pay you hundreds of dollars to try their credit card. They require a certain level of spending within a certain period of time to earn the bonus. For example: a typical credit card bonus offer might read: spend $1,000 within 90 days of opening the account and get a $200 cash bonus. Spending $1,000 or more in the first 90 days will result in either a $200 check in the mail or a statement credit. In either case the reward is tax-free because the IRS considers it a rebate or return of your own money.

Other cards offer travel points instead of cash and some cards give you a choice. The hard part is keeping up with all the offers. Business owners can get cards that require as much as $4,000 in spending in the first 90 days for bonuses of $500 or higher. You can have more than one credit card from multiple issuers too. Virtually all these cards also issues points in addition to the bonus on spending. About once a month from now on I will write on a different topic covering credit cards and the bonuses available. Today we will focus on the most basic issues with special attention to taxes.

Planning Tip

Major purchases should always involve a new credit card with bonuses. Take a personal example. A few years back I had to install a new septic system on my farm called a mound system. These wonderful investments cost in the ballpark of $15,000. I used a variety of credit card tactics to cover over $5,000 of the cost with bonuses. Some credit card offers actually pay a bonus of $100 for $500 of spending, a 20% reward. You also get 1% or more cash-back on the spending in addition to the bonus. See where I am going. Travel rewards are awesome, but daily expenses really add up to significant tax-free rewards.

A furniture purchase can be coordinated with a new credit card with a bonus for a major price reduction. Mrs. Accountant also gets a card in her name to double the rewards. A future post will show how to keep the same credit card to get 20% or more back on your purchases. There are instances where the reward exceeds the spending! Again, a future post will discuss details.

Businesses have it even better. As an accountant there is no shortage of ways to earn cash-back rewards. A new credit card offer requiring $5,000 of spending within 90 days of opening the account is not an issue. Normal spending may already put me over the top. If not, there are things the business needs I can buy in advance. My accounting office always uses postage. I can top out a card at the post office to reach the required spending to earn the bonus reward. Postage never goes to waste in my office.

Maximizing Benefits

People often underestimate the benefits credit cards offer. Running every possible household expense through the credit card and paying in full each month makes managing your money easier at tax time since you have a neat record all in one place. The extra advantage of rewards means you get paid for the convenience! Having more than one credit card to harvest several cash bonuses can add $10,000 or more to your annual income tax-free. Landlords and business owners have an advantage, but even a single-person household can use credit cards to shore up the budget.

Purchases made with a credit card also have certain protections. Read the fine print included with your card or online. Many credit cards offer extended warranties people forget to use; free auto insurance on a rental cars; replacement or money back if an item is stolen or broken. The list gets really long. Read the list of benefits. Many times the saving, especially if traveling, is worth more than the massive cash and travel bonuses. Know and take advantage of all the stuff you are getting and life is richer.

In a future post I will show how you can charge mortgage payments, rent, and even utility bills to your credit card to reach spending limits. The fees are less than the value of the points earned on the credit card so you get paid to do these things. The more you can charge to your card the easier it is to automate your financial life. All expenses can run through the credit card for maximum benefits and then have the bank pay the credit card in full on the due date automatically from your checking or savings account.

If you would rather travel than have cash, I have a deal for you. There are a lot of credit cards with different travel benefits attached. Points, including bonus points, are generally worth more as travel than a cash reward. Sometimes you need to run the numbers to find the value of the points, other times the bank will make it clear how much travel you will get for each point. An example would read: 50,000 points are worth $650 in travel or $500 in cash. In either case the reward is tax-free.

Choosing the Right Card

There are so many choices it can make it hard to start. If you are just beginning I recommend starting small. There are several cards that offer a $100 cash bonus after $500 of spending within 90 days of opening the account. I think every reader here has $500 of possible credit card spending to reach the bonus payout without spending for the sake of spending. If you have higher normal spending you can review cards with higher bonuses.

Business cards generally have some of the best cash deals. I have never seen a limit on how small a business could be. A hobby where you sell some stuff or a rental property would qualify you for most bonus cards as long as your credit qualifies you.

There are a variety of travel rewards programs. Airlines and hotels frequently co-brand with banks. Your preferred airline, hotel, or rental car company may have a co-branded credit card with excellent bonuses and continuing benefits. Having the right mix of co-branded credit cards can quickly turn into free or very cheap travel for the family.

Credit Scores

All this knowledge can bring plenty of free travel and tax-free cash. What you should not do is go crazy and apply for eight bonus credit cards in an afternoon. Before you reach five your credit score will have dropped enough to get you declined. Spread it out. Be strategic. Some credit cards offer 5% cash-back on purchases at certain stores. Pick a card that maximizes your benefits based on your normal spending patterns.  A modest amount of planning will yield the greatest return on your normal spending. One or two new credit cards should do the trick to get started. A few additions to round out your tax-free cash and travel plans can take place over the next several months.


Before I give you a few links to start on your way I want to discuss fees. Annual fees are something I try to avoid. Many banks waive the annual fee the first year if they have one. I always ask if they will waive the fee in following years too. I actually keep two credit cards with an annual fee: the IHG® Rewards Club Select Credit Card and the Capital One Spark® for business card. I pay $49 per year and get one free night per year with the IHG® card. It ends up being a fairly cheap hotel room. I also get points on spending to use for free hotel stays. I’ll link below. The current bonus is probably different than mine was. It was still a good deal for me so I pay the annual fee. I also pay an annual fee on a Capital One Spark® card that pays 2% back. My business spending is so high it actually is a better deal to pay the fee and get 2% back rather than no annual fee and only 1 ½% back.

In future posts I will dig deeper into the issues surrounding credit card bonuses and rewards programs when fees are involved. You have enough today to get started earning some tax-free bonus money.


Understand if you use any links on this page and get a credit card I will be compensated. If you do not want me to receive a commission you can go straight to My commission does not affect your bonus or points earned. If you love me like a brother feel free to start here the next time you wish to order a new credit card. In fact, since we are now brothers, bookmark this page, send it to family and friends, and . . . Okay, I’m getting carried away. What do you expect? I am an accountant. You know how my kind gets when we are around money.

Here are a few starter links. You can use any link to get to pages at and then move around the site to find a credit card that matches your needs.

Here are some cards with high bonuses, but have high spending requirements to reach the bonus reward.

Here are some great starter credit cards with low spending requirements (some as low as $500 in the first 90 days) to get a bonus cash reward.

More starter credit cards I like.

I use Capital One’s Spark® card in my business for most spending.

Finally, here is the IHG card I was talking about for free hotel rooms. Review the details to see if it makes sense to you. Bonuses change and are probably different than mine so check all the details before applying.

There are a lot more choices at the link destinations. You can review programs on travel or cash bonuses. My advice: Don’t get bogged down. Try one or two credit cards today and earn your bonus. You can always come back in a month or two and find another credit card to fill the gaps in the rewards you desire. Start with a plan to get some tax-free money in your pocket.

Update October 25, 2016: Recent changes in bank policies required I break the links in the text above except for this text. You can review current credit card offers most appropriate for your needs with this link.


***Note: Check the TWA Recommends page for all the latest best credit card rewards programs.


Legal stuff I have to tell you (and should).

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Credit Card Secrets | The Wealthy Accountant

Wednesday 20th of September 2017

[…] posts discussed bonuses, cash-back credit cards, and interest free/fee free loans. I consider those the easy benefit of credit cards. Debit cards […]


Monday 12th of December 2016

Hi Keith, chatted with you briefly over email (you're doing my taxes this year!). Was going to sign up for Capital One’s Spark card for the LLC I opened recently. Came here for an affiliate link but I'm not seeing anything. Do you have a link handy?

Keith Schroeder

Monday 12th of December 2016


Friday 28th of October 2016

This is a nice article for newbies. I'm not a pro CC hacker by no means (I discovered travel hacking only 2 years ago) but it looks like that I'll have to start applying for your mentioned 'starter' cards because I'd either exhausted the great travel bonus or cash cards or I don't want to get carried away paying AF thinking it's a great bonus. In addition, people must be careful as CC companies have changed the language in their terms and conditions.

Thanks to the 5/24 rule Chase has implemented I'll probably go 'cold turkey' on 1/1/17 and apply for no more than 4 cards until 2019.:-( Hence my thinking to load up on the $500 starter cards over then next 2 months.

Also, a caveat that people should check if their utilities if they really allow to use a CC to pay. E.g. I can pay phone and natural gas services with a CC, but not electricity and water. Sometimes it can be a big hassle to change payment options (+ extra fee) that it's not really worth doing it in order to pay less than $100/month in such a utility and then 2-3 months later switch again to another CC. It can be a PITA unless it can be easily done online than calling CS and waiting and waiting for help because you cannot do online (this is the case for me). So, you should account for your patience and wasted time factors on bi-monthly basis.

A few questions in case you have an answer. Do you think I (or you too) would qualify for a 2nd IHG CC with hopefully a great bonus? I also pay $49 AF and keep it, but I wouldn't mind to have another one and pay an AF on it as well as long as it's $49. :-)

I'm just an employee, but bloggers suggest to start a blog just to qualify for business cards. As you sound a conservative accountant, do you think it's a legitimate idea because I could try to write but it would be more like dabbling for 'window dressing' most likely. So, I'd probably incur a little of expense for an exchange of a business CC bonus. I hope my social suffice, or do you think such 'budding' bloggers need an EIN and must start thinking how they'll report on taxes, w/o blog hosting fees, etc.? What are you thoughts on such an idea?


Keith Schroeder

Monday 12th of December 2016

Sorry I didn't see you comment right away, Mimoza. Mrs. Accountant and I both have an IHG card and get one night free per year each. My tax practice also has a card and gets a free night annually. They might be pickier now, but they let me in the door when I signed up a few years back.

Blogging is a business idea, of course, but a tough one. Any side gig would do. Maybe gardening and selling at a farmers market or teaching a craft at the library are great ideas for making money. For some reason everyone wants to be a blogger. It is a lot of work and time without much money. My profits from the WA is from new clients and consulting. My situation is different than most, however. Getting a business credit card is possible with any business.

Keith Schroeder

Friday 28th of October 2016

Great comment, Mimoza. As for your questions: I don't think a second IHG card would work, but you can always try. Now if you are married . . . See where I am going. Chase has a 5/24 rule, but my wife and I can team up to double rewards. I also have a list of businesses where I can get cards with bonuses. Also, you don't have to start a blog. Any business will do. Go to the IRS and get an EIN and mark you will not have employees. If you have income there will be some tax reporting, but you effectively opened another avenue for more bonus rewards. I have an upcoming post on unique uses of credit cards you might be interested in. Keep an eye out for it. I think people miss a lot of opportunities with CCs when they focus on only the visible cash-back or travel rewards. There is a lot more value most people miss and never use.