In this post, we’ve shared the 9 best ways to use your credit card to save money. Read on to learn more!
Credit cards are considered to be an important means of transaction despite the fact that payment apps have been introduced on the market for quite some time. However, many people are of the notion that credit cards are similar to debts, and they often end up misunderstanding them. But it is not true, and the fact is that credit cards help us to save money as well. Most financial institutions allow people to apply for credit cards online, and it has become quite simple to get hold of them at present.
Here, we have thrown light on how to save money using credit cards wisely.
How is it possible to save money using credit cards?
It is a fact that almost 35% of our monthly expenses can be saved with the help of credit cards which would have otherwise been spent for paying dues, bills, and so on. Although we usually use credit cards for making online payments, it is hard to overlook the benefits of credit cards when it comes to savings. Let us explain in detail how one can hoard cash using credit cards.
1. Reduce interest by transferring balances
It will be possible for us to save lots of cash in case we possess a credit card having a balance with high rates of interest and end up transferring the balance to a low-interest rate credit card. 0% APR balance transfer offer will enable us to pay off the balance without paying any interest at all. We simply need to be certain that the balance becomes nil every month. Or else, it will be imperative for us to pay high amounts of interest in the long run.
2. By getting a gift while signing up
New users are always encouraged by various financial institutions to register for some particular credit cards. It will be possible for you to make use of this incentive for getting a gift according to your preference. However, while some of these gifts will be guaranteed, you might receive the others in the form of a lucky draw. Consequently, it will be a good idea to go through the terms and conditions prior to signing up. For example, you will be able to get hold of some essential appliances for decorating your home by simply making an application for a credit card.
3. Take caution while settling your credit card debt
Many customers employ a standard technique to reduce their credit card debt: they take advantage of balance transfer credit cards, which provide a low APR on the transferred balance for a limited period. Make sure you undertake a cost assessment before using this strategy because most credit cards now charge a debt transfer fee that has to be paid while switching. You must likewise consider if you’ll be able to pay off your loan fully before the expiry of the promotional 0% rate period for preventing a hike in the card rate. In case you are not able to do this, a balance transfer might still be worthwhile if the new card has a lower APR as compared to your previous one.
4. Avoid paying for car rental insurance
Using the rental coverage provided by the automobile rental business might increase the cost of your rental by a few dollars each day. Nevertheless, depending on the credit card you use, you might not need that added security. When you reject the coverage given by the automobile rental business and pay for the rental by making use of your credit card, many credit cards are going to offer car rental insurance. Each time you hire a car, you will be able to save a considerable amount of cash in this manner.
5. Reward points
It is a fact that most of the issuers of credit cards come with their own reward program. For the majority of the cards, a value of somewhere between $0.0027 and $0.010 will be fetched when it comes to reward points. On some occasions, some credit card issuers enable the reward points to be converted into cash for paying credit card bills. It will be prudent to evaluate the structure of the reward points beforehand so as to take advantage of them. However, in case it is not allowed by the issuer, make sure to comprehend your requirements and choose the appropriate gift coupons.
6. Selecting the best card
It is of prime importance to select the appropriate credit card for enhancing your lifestyle. For example, in case you’re living in a large family consisting of quite a few members, a shopping card might be ideal for you which will enable you to purchase your household items easily from the stores. On the other hand, if you are in the habit of commuting to your workplace and other locations, a fuel card will suit you more.
7. Paying off your bills beforehand
It is a fact that your credit profile is going to improve in case you end up paying your bills using the credit cards regularly on time. In this way, your credit score is going to improve significantly in the long run. Moreover, you will be able to enjoy several other benefits such as lucrative offers on financial products and enhancement of your spending limit as well.
8. Receiving cashback to your account
You will come across some credit cards on the market which provide you with reward points, while others might offer you cash back while spending. Here, we like to mention that these cashbacks will come of use to you only when you purchase something. In other words, these credit cards will be returning a certain percentage of your purchases. Although it is definitely a bonus without working much, you will enjoy the real benefits with those credit cards which offer much more.
9. Do not own a lot of credit cards
One cannot deny the fact that an excessive number of credit cards might be hindering your credit score in the long run. Having too many credit cards can prove to be a major problem in case you are not able to pay your bills and find it difficult to manage the credit cards. This is because you need to monitor each billing cycle as well as payment due date while owning more than one card. It can also result in unwanted debt and overspending. In this way, you will end up losing cash eventually.