How to Save Money with Credit CardsPosted on: September 24, 2019
Many of us abuse the use of our credit cards and often end up in debt. However, if you can use the plastic in a responsible manner, you can actually save money with credit cards, and are often better off using them rather than paying in cash.
Here are some money saving strategies you can take advantage of to get the most out of your credit cards.
Rewards and Points
When you have a credit card that earns points, you can earn as much as five points for every dollar you spend. There are also several occasions when companies will offer special three-month promo periods where you can earn double or triple the usual amount of points. When you reach a certain point threshold, you can redeem your points by buying items direct from the credit card company’s rewards catalog or exchange those points for hotel stays, merchandise, gas, shopping vouchers or lifestyle experiences like concert tickets, movie tickets, fitness trackers and spa treatments.
The trick is to find the right rewards card that best fits with your spending pattern. For example, if you patronize a particular brand of clothing, gas station, hotel chain or airline, you can earn points and enjoy rewards faster. In this way, you get to Save money with credit cards in exchange for points and rewards and enjoy some really great perks — which if you add everything up is basically more beneficial than if you paid outright with cash.
With travel rewards credit cards, you would rack up miles every time you book a flight with a specific airline. When you have accumulated enough frequent-flyer miles, you can redeem these miles for airline tickets, special airline discounts, companion tickets, hotel room discounts and other perks such as rental cars, use of airport lounges, cruises, trip cancellation insurance, trip delay reimbursement, lost luggage reimbursement and other reward options. Now that’s some very valuable mileage with huge savings for you! If you travel frequently – as in a lot – this could be a very valuable credit card reward for you. It goes without saying that if you barely ever travel, this is not the type of credit card for you.
Cashback credit cards are great because you can literally earn cash back every time you make a purchase on your credit card. The cashback is credited back to you on your monthly bill. When you check your next monthly statement, you can see the cashback offsetted on the month’s credit card bill. Some cards offer 2%, 3% or even as much as 6% cash back on selected purchases. There are some cards that offer an even higher rate of cash back but requires you to deposit the cash reward directly into an investment account.
With a cash back card, you can earn rebates mostly on dining, groceries, gas, food delivery, for shopping at specific stores. This lets you save money with credit cards on essentials like food, fuel, groceries and other daily necessities. However, cash back cards require a minimum spend each month before you can start earning cashback and they set a limit to how much cashback you can earn per month. If you’re confident you can hit the minimum monthly spend without hurting your budget, then the cashback reward may be worth it to help you save money on groceries, dining, petrol and other essentials every month.
Consolidate your credit card debt carefully
If you have high credit card debt , you can transfer your credit card balances to help you pay off debt. A balance transfer card offers a 0% or a low APR on the amount that is moved over, but only for a limited introductory period. To make sure you save money on this strategy, you need to be able to pay off the entire debt balance before the promotional rate period is over, in order to avoid any increase in the card rate. You can still save money whether the new card offers a 0% or low APR, and in the end it may still be worth doing a balance transfer because essentially the new balance transfer card carries a much lower APR than your old credit card. Calculate everything carefully. It would help a lot if you do a cost benefit analysis so you can take into account all costs and charges, like if you’ll be charged a balance transfer fee if you do the switch.
It’s impossible to get into debt trouble if you know how to use credit cards to your advantage. In fact, there have been many instances where the credit savvy can even save money with credit cards and use them in the most favorable way. They are a very handy tool to have in your life and if you are careful about how you manage your spending when using credit cards you can benefit a lot from all the perks they offer without damaging your credit and putting yourself in debt trouble.