Most of the below information in this post were from the old threads and have been around for 7-9 years, but I'm leaving included for people new to the field. I have edited/updated the below to reflect any changes and have as up-to-date as possible.
If you didn't read the old thread, but just saw the title of this thread, the first thing you're asking yourself is:
Is this real? It sounds too good to be true.Yes. It absolutely is real. In the first six months of tradelines, I earned over $16,000. In the decade since starting, I'm well over six figures. Other Mustachians--since I posted the first thread years ago--have signed up and earned thousands of dollars as well. It's definitely real, and it's paying out many thousands of dollars every month. It's not a scam, it's a way to use your credit cards to generate massive amounts of money for almost no work, legally.
I know a number of people who have earned six figures, and many who have earned five figures_.
I net between 20k and 40k per year for an hour or two a month of work by this activity: selling trade lines on our credit cards. This post is to introduce you to the idea, if you aren't familiar with the concept, or give more info if you've heard of it, but haven't looked at it closely yet.
What Is It?Essentially, you are adding authorized users onto your credit cards, temporarily (for a month or two, before you remove them), and getting paid to do so.
Huh? What? Why? How does it work?As you know, many things in our country run on credit, and if you have good credit, you are charged a lower interest rate when you finance things. If you have bad credit, you are charged a higher interest rate, and pay more money for things.
Due to this, people are often looking to temporarily "boost" their credit score. If they are going in to buy a car, for example, if they have a bad credit score, they are going to be charged a high rate ("While the average interest rate for borrowers with good credit is between 4% and 5%, subprime borrowers will pay an average of 10% to 13%, depending on their credit score." -
Bankrate.com).
Instead, they might pay $1000 (or whatever--all the numbers in this post will be illustrative) to a credit boosting company, who acts as the middleman bringing together people who have credit cards with a long history and/or high limits, and people who want their scores boosted. That company then turns around and pays you $125-275 (depending on the card's age and credit limit). You add the person as an "authorized user" on your credit card you've had open, say, 5 years that has a $15,000 limit, and no late payments ever, and you spend a few bucks on the card, so it closes with a balance.
This new authorized user never receives a card, and can't spend any money on the card (see more details on this below).
A few weeks later, your credit card statement statement closes, the credit card company reports to the credit agencies that this individual is an authorized user on this card, which now, due to the amount of time the card has been open and the extra available credit, boosts their score. They go buy the car, and save a bunch of money on interest.
A month or two later, you remove that person as an authorized user.
Okay, so, how much can I make?Well, depending on the card, you can sell 2-5 trade lines (authorized user spots) every other month (i.e. two month cycles). The amount you make depends on your card: how old it is, and how large the credit limit is. The older it is, and the larger the credit limit, the more it helps the AU, and the more you get paid. Payment amounts range from $75-$225+.
Some cards they cap to 2 tradelines to help them from getting cancelled while other cards where the credit card company doesn't tend to cancel you might go up to 5 lines. Ditto with how often they fill the lines up--some they keep for two months, some they will load up every month.
(Disclaimer: Below numbers are illustrative and may not be up to date based on current payout schedule. Adjust example to fit your situation.)
So say you have a Bank of America card (2 spots), Barclay (5 spots), Citi (5), Discover (5) and US Bank (5), and they all had between a 10 and 30k limit, and were all 2+ years old. You'd be making in the range of $75 ($10-15k cards) to $175 ($20-30k cards). Say an average of $150 per tradeline.
If you sold all of those (22) spots over the course of the two months, you'd make $3,300 (22 spots x $150/spot) per two months, or $19,800 annually.
Now imagine you had more cards than those five, or that you a spouse also that you enroll...
The numbers can get very silly very quickly.
Some months are slower (less people using credit, it's cyclical) so you might not make as much, some months you'll fill up everything.
What credit cards can I use?Any card issued by: Alliant Credit Union, Bank of America, Barclay, Capital One, Chase, Citi, Discover, Elan Financial, Navy Federal Credit Union (NFCU), PNC, TD Bank, U.S. Bank, Wells Fargo
These are the issuers right now that the companies I recommend use. Cards issued by other credit card issuers tend to not post correctly (e.g. you add the AU, but it doesn't show up right for them) or have the card cancelled (see risks, below).
Those issuers tend to reliably post and not cancel cards. Other companies may support other cards, but they may carry additional risk and hassle, and those companies may not be as reliable in terms of fraud and abuse (see below, as well as the rest of the thread for discussion).
Concerns:Is this illegal?Not at all. Totally legal. Also very likely against your credit card terms of service though, so you are at risk of them closing your credit card account.
What if the Authorized User spends a bunch on my card?Not possible--they never get a copy of the card. It's sent directly to you, to your address on the account. Even if they call for a replacement card or something, A) They won't have the information needed to "verify" your account (like last 4 of your social, or your DOB, or anything about you), but further, even if they could, the replacement card is also is sent to your address. As an authorized user, they can't change any info on the account, nor get a card shipped to them. They'll be on the account for a month or two, and then removed, with no access to do anything on the account, nor any account information, nor the ability to spend any money.
The companies I recommend has NEVER had an AU get a card and spend money on it, and they've been doing this for twenty-ish years. My previous recommendation, who has been in business thirteen years, have also never had that happen. Thirty-plus combined years, thousands and thousands of tradeline sales, zero instances of this. I'm not worried about it happening in the slightest.
Do I need to have a good credit score?No, not at all. Your credit score never shows up on their account, at all. Just the card(s) you enroll be in good standing, with no late payments ever. The longer they've been open, the more likely someone is to purchase a tradeline on them. So the cards need to be good, but your credit itself doesn't matter.
What if the credit card company finds out? What if my card gets shut down?That's the big (potential) drawback to this: your credit card company might close the card. The tradeline companies I use do some things to mitigate this, like I mentioned above: having you leave the AU on for two months instead of one, limiting certain cards to only 2 tradelines (other companies that have been less likely historically to close cards they do up to 5 tradelines).
In a worst-case scenario, the credit card company may shut down other lines and accounts you have with them besides that one card, and/or refuse to issue you new cards. Chase is the only one I'm aware of that does this, so be careful with them, but the other companies, if they shut your card down (which is rare) will likely only shut down that one single card, not any other accounts with them, nor refuse to issue you any new credit.
Will this affect my credit score?It doesn't affect your credit report, or score, at all. Having an Authorized User, or not, is not a criteria on a credit report/credit score. (If it did, that obviously would be biased--either for or against--someone who is married, for example, and has an AU to add.)
If your card gets shut down, that could have an impact on your score (from having less "available credit"), however it won't affect it from merely being closed--the card, even when closed, still shows up on your credit report (for I think 10 years?), and the reason closed is the same as if you called them to close it, there's no hit as to "why" it closed. Just the potential small hit from amount of available credit (e.g. affecting DTI).
If your card isn't closed though (which, again, from what I understand, it's not common for them to get shut down), there's obviously no change to your credit score. In fact, your score will likely go up when you first start from calling and raising up your credit limits.
Isn't this unethical?I guess that depends on you. When you add an authorized user, it usually asks what your relationship to the person is, and you choose: Spouse, or Other (some CCs have "Spouse, Child, Other" and similar options..., but there's always an "Other" choice from what I've seen). I, obviously, choose other.
Adding them, or removing them, doesn't require lying, or doing anything illegal. You add someone online, and then call to remove them. I actually did this the other day, I called and said "I have two authorized users on my account I'd like to remove." The customer service lady said no problem, had me verify their names, she confirmed they were removed, I said thanks, have a good day, that was it.
It does potentially violate the credit card company's terms of service, which means they (as a recourse for that violation) can shut down your card. Okay. I obviously don't have a problem with it.
Our credit card system in the U.S. is unique. The credit card companies make billions each year on people paying interest. I'm not too worried about them.
One more perspective--as Meadow Lark said in her journal when someone asked about the ethical implications:
"I don't see it as fraud. It's not illegal. I'm not saying the AU is my kid or my husband - there is no lying. There are a lot of different ethical frameworks people have. Within my framework, this is ethical. It's fine if we disagree. I believe there is nothing wrong with helping other people improve their credit. I believe there is nothing wrong with profiting from a loop hole in a financial system that was designed to foster increased income inequality. I could go on and on, but I don't want to bore you."
If you feel it's unethical, that's fine. It's definitely not worth doing anything you feel is unethical simply for money. Steer clear, in that case. :)
Okay, so what do I do to get started?Well, you go to a trade line sales company and sign up with them.
Be careful, because some are sketchy. Make sure you research into one that is legitimate, an actual business that has been around for several years, etc. Look into complaints about them and such.
The companies I use, I chose because I got a good recommendation from a fellow Mustachian, researched into it, and they are totally legit. If you decide to proceed, you will sign a contract, sign up for payroll, they 1099 you, etc.
I won't put more details here, because this post is just to introduce you to the concept of the idea, not spam/shill for a particular company. If you want me to refer you to the companies I use, send me a PM.
After you choose a company, and sign up with them, you'll want to go to
CreditKarma.com, make a list of all the cards you have, the statement close dates, credit limits, and when they were opened.
Then you'll may want to call each of the CC companies to increase the limit on the cards you have (higher limit = paid more for the trade line).
Then you just add users when you're instructed, and given the information for the AUs.
So how much actual work is it? What does it actually look like, step-by-step? How did you calculate that dollar per hour figure in the title?First, as above, you sign up with the company and send them the info on the credit cards you want to enroll (you don't send them numbers or anything, of course, just which cards you have--the issuing company, limit, and how lont it's been opened).
Then it looks like this:
1) You get an email that a user needs to be added.
2) You go to the website of your CC company, and add the Authorized User online (time = 2-3 min)
3) You spend $ on the card (you can use it for any normal spending, which I have done, sometimes paying a bill online or whatever with each individual card, or if I have no spending I need to do on a CC, I load my Amazon gift balance with a few bucks on the card--but the card does need to have some balance on it when it closes to have it report correctly) (time = 2-3 min)
4) After a month or two, you call up your CC company and ask to remove the AU (time=5-15 minutes, depending on how long you're on hold).
I also spend a minute or so per card plugging it into my tracking spreadsheet (see previous post for an
example of my spreadsheet) when I add the user and do the spend, and when I pay the card off.
Total payment for this time = $225 (for my average card, yours might be a bit higher or lower). Total amount of time = ~10-20 min. Hourly rate = $700-$1300-ish per hour.
How do I report it to the IRS?Like any other income. If you choose a reputable trade line company, you'll get a 1099.
WarningLet me repeat again, even though I mentioned it above: This has risks. It is almost always against the credit card company's terms and conditions. You should understand the risks before committing to anything like this.They can, and very well might, shut down your account.The way I've made my peace with it:
If someone came to me and said I'll pay you $50,000-$100,000 to shut down all your old credit cards (with the caveat that it won't hurt my credit score too much*), would you do it? Heck yes, I would! I'd jump on that deal in a heartbeat. So even if, over the next few years, ALL my CCs I'm using end up getting shut down (which I'm highly doubtful of), I'd accept that trade.
*It wouldn't affect my credit score much at all--the cards would still stay on my credit report for 10 years, and I'd still have other cards (like Amex, which aren't in this program) boosting my score. It'd just hurt my DTI since I'd have less available credit, but I don't have any CC debt anyways, so my utilization is always near 0 anyways, plus I can open new cards. I do all the time anyways, for travel hacking.
So you'll pay me tens of thousands of dollars in order to shut down my older cards, but leave them on my credit report, but just have to open some new ones to increase my available credit again, and start those aging?
Great!
Heck, the only reason I have those old cards is to boost my credit score--I have no use for them otherwise. So if it'll still stay on my credit report for 10 years, still showing a long, positive payment history, then why not use them to make money with them also?
Yes, I'll take that trade. Especially given that the cards may not necessarily be shut down, and you can stop doing it any time.
So, like I said, I don't know which, if any, cards will get shut down. If some do, maybe I'll stop with the rest at that point, maybe I won't, but I've made my peace with the fact that the CC companies don't like it, and may shut it down, by thinking of it in those terms. I'd absolutely take that trade, so why not try it out for the next year or two and see what happens?
Again, if you want a referral to the companies I use, feel free to PM me, but I don't want this to turn into spam/shilling for certain companies--we've already seen high traffic for it from Google, and I know from being contacted that it's on the radar of some of those companies, and I'd rather keep the spam out.
This sounds pretty awesome, how do I get started?If you want a referral to the tradeline companies I recommend, Click Here To Send Me a PM.I think that just about covers everything.
Feel free to post any questions you have and I'd be happy to answer.
Please see the next post for more details on the companies I recommend.
If you want to read more discussion around the legality, ethics, and lots of random questions from when this first started on the forums years ago, go read the
old thread on this.
