Credit cards attract a lot of controversy and the reason is many people don’t use them wisely. If you know how to use your credit cards wisely, you can save money using them and reap some great rewards.
I love credit cards. I use credit cards every time I get a chance to use them. Credit cards are part of our lives and we cannot ignore them, so why not learn how to use them correctly.
But then why some people avoid credit cards? Why do some people think they are bad?
Credit Cards to me are like fire, you have to be the master not the slave.
You have to know the right way to credit cards in order to maximize the benefits of credit card and save money.
Get rewards cards.
When you pay with Credit Cards, you may get rewards on your credit card. You will not get these rewards when using debit cards or cash to make the payment. These rewards can quickly add up. Most credit cards give rewards of 1% as cashback, points or miles but often they have category bonuses which can make rewards as high as 6% on groceries ( AMEX Blue) , 5% on many rotation categories ( CHASE Freedom), 5% on amazon ( Citi Forward).
Pay your balance in full every cycle.
This is the most important aspect of using credit cards to your advantage. If you pay the balance in full every month, you won’t have to pay any interest charges and will save a lot of money. Credit card companies are counting on you to make minimum payments so that they can charge you
One simple trick is to automate your credit card payments. This way you will not forget to pay the bill when due and avoid unnecessary fees.
Don’t pay fees – unless the benefits outweigh the fees.
The truth is I pay fees on my credit card. The only reason I do that is because the credit card benefits outweigh the fees the fees I pay. I am currently paying $95 on a British Airways credit card.
The benefits I get for my fees are:
– 10% Discount on round-trip airfare.
– 1.25 miles per dollar
– 2.5 miles per dollar on BA flights
– Discount on movies from Fandango in summer – when using a Visa Signature card.
– $100 in dinning credits at Michelin rated restaurants.
Make use of additional credit card perks
Credit cards often come with perks which are not advertised. Some of these are only available in cards that come with a fee, but it may be worth paying the fee if you would have otherwise paid for any of these.
Extended warranty on electronic: You can save hundreds of dollars on your electronics purchase by buying electronic items using your credit card.
Price guarantee on purchases: Looking for the best price of an item? Worried the price may go down after you have purchased? Found a better price after you have made the purchase. Most stores have a price match policy which may cover you. If not, you have your credit card to the rescue. Many credit cards have a price guarantee feature, where if you see a lower advertised price for the same item you have purchased, you can file a claim and get the difference back.
So do you use credit cards wisely?