There are so many credit cards in the market today. You pick one that you find is good for you and then start to spend using it. However, the most important thing is to be able to use your credit card in a way so that you can optimally and wisely save money, even when you are constantly charging them. Let’s talk about a few strategies that can surely help you to maximise what you get from your credit cards.
Several consumers make use of a very common strategy to reduce what they actually owe on the credit cards that they have. They choose the balance transfer credit cards that offer 0 percent Annual Rate Percentage on the amount that is moved. However, they use it only for an introductory period which is limited. Most cards have a fee associated with balance transfer. So, make sure that you understand if the move is cost effective for you. At the end of the day, you must benefit from this particular action. You must assess if you can go ahead and the pay the entire debt amount before the end of the promotion rate period. If you are not able to do so, you will not be able to avoid the increase in the rate of the credit card. A balance transfer will also make great sense if the annual percentage rate offered by the new card is way lower than your old credit card.
Many people like rewards credit cards. But the important fact to keep in mind before getting a rewards credit card is that the interest rate associated with it is much higher than other credit cards. Let’s say, you get an American Express Rewards credit card, but you are not able to clear the debts in full every month. Then it doesn’t make sense to get a rewards card. Instead, you should go for a card that comes with lower rates of interest.
The credit card environment is pretty strict nowadays. It is quite difficult for card members to initiate a money building scheme using the credit cards. In earlier times, it was much simpler to borrow funds using cards and then putting those amounts into savings accounts which would offer high rates of interest. Thus, it was easy to yield more money. But the savings accounts do not offer that good returns, hence, the strategy does not work that well anymore. However, some people might still engage themselves in this activity. It requires great organisational skills to play this game as one wrong step can make you lose more than what you have earned.
Penalties and finance charges that are exorbitant can be easily avoided if pick up some good habits like paying the credit card balance in full or paying substantially more than the minimum due amount. The best thing is to pay off the entire amount that is outstanding. However, you might be in a tight spot and paying the entire amount at one go might look a little difficult. In such situations, try paying more than the minimum balance at least. This will save the interest amount that you pay over a long duration. Maintaining such a healthy reputation will also ensure that you get rewards on your credit card.
Comparing the offers on different credit cards is the ideal thing to do before you go for a credit card. You must read the terms and conditions of the card carefully. Based on how exactly you use your credit card, you will be able to find the card that suits all your requirements and needs. Different cards are designed for different types of users with variable spending habits. It is always wise to go for a credit card that allows you to enjoy maximum privileges based on your spending habits.
Too many cooks spoil the broth! If you have too many rewards cards, then optimizing the rewards on one particular card will be much difficult. If you have too many credit cards, there is a high possibility that you will end up spending a lot more than you should. Overusing the credit limit is definitely not the right thing to do.
Some people do not keep any emergency fund and rely on their multiple credit cards when they are in need of financial support. If you do not have any savings then you will end up keeping a lump sum balance on your credit card. This suggests that you will also pay good amount of interest. Thus, in case you charge up a storm, depending on credit cards for financial backup can prove to be quite expensive.
If you really want to earn rewards on your rewards credit card, then it is ideal to spend on items which can be repaid in full by you at the end of the month. For everything else, keep a different credit card. Make sure that this card takes care of your other needs and also comes with a low rate of interest.
If you maintain a healthy credit history, you may get some benefit here. Considering the fact that you have been a good customer for some time and cleared all your bills and dues correctly, you can speak to your card issuer to discuss the chance of reducing the interest rate associated with your credit card. Card companies love the customers who are good and might just accept your request too.
It is good to avoid using your card for cash advances. The convenience that you will get is not worth the amount that you will end up paying for the cash advance.