Surprising Way to Save Money on Your Credit Cards
September 19, 2013, BY Sandra
Why did you apply for your most recent credit card?
A promotional balance transfer? To finance some new furniture for your home? An enticing reward bonus? Sometimes we choose credit cards for the wrong reasons and we can get into trouble. After working for a credit card company for 3 years, I have put together a list of ways for you to save some money with your credit cards.
Pay Your Balance in Full
By paying your balances off in full every month every time, you won't have to worry about paying interest. You will also get the extra rewards your card offers that could definitely come in handy. From points to benefits, paying your balance in full will make your credit card work for you, not the other way around.
Know the Interest Rate on Your Credit Card
It always amazing me when someone is carrying a balance on a credit card that they don't know what their interest rate is. Find out what the rate
is and find a way to pay less interest. Whether you look for a balance transfer promotional rate, ask for a lower rate on your card, find a different product to carry your balance or pay it off faster, you will help yourself by saving money
in the long run.
Use Balance Transfer Promotions at the Right Times
Balance Transfer Promotional Rates can be a tricky thing to manage but once you know how they work, they can be very helpful at reducing your interest costs
so you can pay your debt off faster
. If you find an offer for a balance transfer at a great rate and want to take advantage of it, here are a couple things to keep in mind.
- First, make sure you ask what the rate is, for how long and what fees are associated to do the transfer. You may find out that paying off your Line of Credit with a Balance Transfer isn't worth it after all is said and done.
- Second, make sure you pay your minimum payment on time every month during the promotion (and always, really) because sometime promotions can be deactivated because of delinquency.
- Thirdly, make sure you don't mix retail spending and your balance transfer on one card. Often you will find that you will end up paying interest on your purchase, when you planning to pay them off in full.
- Fourthly, make sure you pay off your balance by the promotion end date. Sometime Balance Transfers can have retroactive interest if this is not done, or the new interest rate could be much higher than what you were paying before.
The moral of the story, is make a plan
. Figure out what your goals are and how you will deal with your debt once the promotion is over.
Ditch the Retail Credit Cards
One of the first things I learned about retail credit cards is that their interest rates
are about as high as you can get on credit and offer very little benefits. These are cards you do not want to â€œcredit and forget it
â€ for a new big screen TV because that can end up costing you a lot of money.
Don't Make Cash Advances on Your Credit Cards
There is no interest-free grace period
on cash advances on your credit card, so interest kicks in the day you borrow the money until the day you pay it back. Often credit cards will charge a higher interest rate and sometimes fees for these kinds of advances.
Make Sure the Rewards Program Works for You
Cash Back, Travel Points, Air Miles, Gift Cards there are many different ways credit cards try to reward you for spending on your card. Not all of these programs work for everyone, so make sure you have a points program that suits your life style
. Do your research and look at all your options for rewards before you choose the card.
Negotiate the Annual Fee
The more rewards you have on your card, the higher chance an annual fee will come with it. If you travel often and need the trip cancellation insurance benefit, for example, then the annual fee may be worth it for you. See what your benefits are and if you are actually going to use them and if not, choose a card that doesn't have an annual fee on it
Know When the Bill is Due
Missing your due date is an easy way to break your interest-free grace period
and force you to have to pay interest when you may have intended not to. Don't wait until the due date to pay, try paying it
right when your statement
Reduce the Number of Credit Cards You Have
The more cards you have the higher the chance you can get into trouble by forgetting a due date or charging more than you can afford to pay. Reduce the amount of cards you have to only the ones you need and can manage
. Make sure every card has a purpose,
i.e. Online Card with a small limit, Daily Spending Card, Balance Transfer Card and maybe an International Card.
Lower Your Credit Limit
If you are someone that if you have access to $10,000 you will want to spend it all, then look at lowering your limit so you don't get in over your head. Credit cards will always try and approve you for as much as they can, so if it`s too much for you, call and reduce it
Stay Under Your Limit
Don't reduce your limit too much though, because going over your limit can have costly consequences. Overlimit fees range from $20-$35, so make sure you save yourself some money and stay under your limit.
Watch What You Spend Out of the Country
With most credit cards, if you are using a different currency (US, Euros etc.) there is often a Foreign Transaction fee
associated with your purchases. It is typically 1.5-2.5% off your transaction and there is no way of getting around it. Look for a card that doesn't have an FTF or minimize your spending
on a credit card when you are outside of the country or shopping online in a different currency.
Using a credit card doesn't have to cost you money, it can actually MAKE you money
through its reward programs and benefits. You just have to use it and pay it in full every month
by your due date and you can make it work for you!