Are you scared of having credit card debt? You should be, because outstanding balances cost you every month. But that doesn’t mean you shouldn’t use your credit card at all. Here are some credit card tricks that will actually save you money.
1. Get the right rewards
Even if you already have a credit card, you should shop around to ensure that you’re maximizing your rewards all the way. The rewards also have to match your lifestyle. Free miles for air travel are great if you’re a frequent flier, but not if you’re a homebody. Compare cash-back plans and see what you can use points for, choosing the rewards that will be most useful to you.
2. Max out your rewards, but not your card
Go cashless for all but the smallest transactions. Every time you use your card, you’re getting some of those carefully selected rewards that you wanted when you went in choosing a card in a clever way. Check your balance frequently and remain within the same budget that you worked with when you were using cash, so that when you pay off your card, your balance is back at zero.
3. Pay everything before the due date
You obviously don’t want to incur charges on your normal monthly expenses, if you do, they’re actually costing you more rather than less which is the whole point of this exercise. If you are able, zero your balance every month before the due date. If not, ensure that you factored your longer-term repayments into your budget.
4. Get 0% APR perks and use them wisely
Consolidate debts you can pay off fast onto a card with a 0% APR. Some credit card providers are offering introductory deals that allow you to get 0% APR for a full 12 month period. The thinking behind this is relatively simple. If you are paying interest on accounts that you can pay off within 12 months, you shift them to your card and save on all that interest. A word of warning: find out if there are transfer costs when you do this.
Be sure that you will cope with repayments before taking the plunge, because credit card debt is expensive, and as soon as your grace period expires, a high APR will kick in. If the card doesn’t offer competitive benefits once you’ve used it to get a head start on paying off debt, cancel it and get one with better rewards.
5. If you already have credit card debt pay it off fast
No matter how tight your budget is, implementing a few money saving strategies around the house will help you to pay more than the absolute minimum your provider expects. Although the amount you add on to your repayments may look like small change, it’s small change that saves you compound interest.
Paying just a little more than you need to every month amounts to significant savings that you can enjoy later on. If you have a lump sum or windfall, put the bulk of it straight into your credit card debt. It will save you more interest than it will make you if deposited in a bank.
6. Cancel some or all of your store account cards
The more store accounts you have, the more marketing material tempting you with the latest products you’ll receive, and the greater the chance that you’ll overspend simply because you happen to have the card. Unless a store account offers fantastic perks, cancel the account formally, ensuring that it is closed before getting rid of the card itself.
7. Get customer satisfaction
If you’re paying by cash or check, any problem you have with goods is between you and the retailer. If the retailer won’t refund you for shoddy or damaged products, you just have to give up and walk away or else resign yourself to a lengthy and expensive legal battle.
Credit cards offer a lot of consumer protection. If you’re double charged, or are returning goods because you are not satisfied with them, your credit card is your best weapon. Your provider is legally required to help you and has a lot more bargaining power than you ever will. There are even deals that arrange refunds if goods are lost or stolen after purchase.
8. Get extended warranties
This perk is offered by many credit card providers. If you’re planning big purchases such as home appliances, the extended warranty option can get you up to a year longer guarantee. But do bear in mind that this is a relatively minor perk and rate other benefits you can be sure of saving on more highly when choosing a card.
9. Get free insurance when you rent a car
If you regularly use rented vehicles, choose a card that offers free insurance on rentals. Insurance charged by car rental companies is quite an expensive item, but if you pay with your credit card, you can do away with that expense altogether.
10. Understand your spending habits
Now that you’re doing most of your shopping using a credit card, you can see all your expenditure on a single statement. If you’re looking to reduce cost, create a budget, or check how real spending compares to a budget you already formulated, checking your account will help you in developing your strategies to save.
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