Can You Become a Millionaire Using Credit Card Points?

Disclaimer: The content in this blog post is for educational purposes and should not be construed as financial advice. Money decisions and financial planning require personalized guidance based on individual circumstances. For professional advice tailored to your specific situation, it is recommended to consult with a licensed financial advisor or investment professional.

Is it possible to become rich and achieve millionaire status using “free” credit card points or cash rewards? The answer is yes. However, I doubt that it’s ever been done or that it ever will be done.

For a person to accomplish this monumental feat, they would have to be intentionally dedicated and smart about the way they handle their money. No mistakes could ever be made and all of the assumptions would have to remain true for a long period of time.

The Assumptions and Math Based on Real Stats

In order to receive credit card points or cashback rewards, one must spend money on credit cards.

In 2022, the average annual consumer expenditure in the United States was $72,967. Let’s assume this person has a cashback credit card that pays them back 1% for all expenses put on that card and they use this card for ALL of their consumer spending. That’s a yearly cashback reward amount that totals $729.67.

The average yearly return of the S&P 500 is 11.3% over the last 50 years, as of the end of February 2024. Let’s say our hypothetical person invested $729.67 per year in an S&P 500 Index Fund. That’s incorrectly assuming there would be no inflation and average spending would stay the exact same year after year.

Investing $729.67 per year with an average rate of return of 11.3% would yield over $1 Million in about 47 years. To be exact, after 47 years the total would be $1,093,885.62. A young adult could start this process at age 18 and have $1 Million by age 65!

Above investment calculations completed on the investing calculator found here.

$1 Million from Credit Card Rewards

This does seem enticing! Think about the tax advantages… I don’t believe that cashback credit card rewards are taxed as income (I could be wrong about this). And you could invest the money into a Roth IRA, which means it will grow tax-free. You’ll never have to pay taxes on the investment earnings!

While the math works out, it is highly unlikely that this scenario would ever play out in real life. There are too many pitfalls and traps. Life rarely works out as planned and to top it off – this is a really stupid plan.

My advice would be… DON’T try this at home! There’s just too much that could go wrong. There is more potential for downside and it’s not worth it to take those chances.

Yes, you should invest for your future and grow savings that far exceed $1 Million. Just don’t rely on “free” money from credit card companies as your source of income to fund those investments.