Credit cards are typically used as convenient tools for expenses. They are, however, money-savers if used correctly. You can gain the benefits from the credit card once you have settled on the right card and come up with simple tactics that will keep you away from the typical risks such as high interest rates and fees.
Select the right card
To start with, ensure the credit card you settle on matches your spending habits. Many cards have such diverse rewards: cash back, travelling points, discounts, and much more. Knowing where most of your money goes will help you identify the best option available. For instance, if you shop at one outlet or travel often, you would be able to get increased savings using a card that specifically offers benefits in those areas.
Apply the welcome bonus
Almost all credit card issuers offer a welcome bonus to attract new customers. The reward can be in the form of reward points or in terms of cashback, or even vouchers for crossing a minimum spending threshold. Sometimes, the issuers also waive the annual fee for a year if you have reached a certain amount of spending. If you plan some good purchases for the initial few months, then you will enjoy most of the offers.
Pay on time
Pay credit card bills on time so you will not be exposed to extra interest fees and late charges. A credit card can give you many kinds of rewards and benefits, but its high interest rate can be charged to an unpaid amount. Do not miss payments to avoid fees and a bad credit rating. Cut your costs by paying for your balance in full before the deadline without activating expensive interest or a bad credit rating.
Reward your points
Most credit cards offer reward points on purchases: travel, shopping, or even cashback. By using your card frequently at places offering extra points, you can assure yourself that you will earn your rewards in no time. Don’t forget, however, that most points expire soon, so get them redeemed before they become void.
Take advantage of offers and discounts
However, the case is different with cash-back credit cards, which sometimes offer some benefits, like cash rebates on purchases in one store or discounts at one retail location. If you use those benefits wisely, then you’ll save a lot of money. Pay attention to the benefits and adjust your spending to maximize the amounts of rewards.
Keep outstanding balance as low as possible
Frequent usage of your credit card helps build up your credit score, besides raking in some rewards. However, it is very important that you note your credit utilization ratio. The ideal ratio is less than 40 per cent. A lesser ratio not only benefits the credit score but also strengthens you from overextending your wallet.
Avoid using for cash advances
Cash advances can be made with a credit card, but it should be avoided as much as possible since high fees begin immediately and start adding in interest charges. The minimum balance pays only some additional costs on the bill in terms of interest charged on the remaining balance. The best way to ensure cost for you who use credit cards is by paying your bill monthly.
By responsibly using this credit card, you can enhance your financial flexibility, and enjoy the rewards, and benefits of savings. But also make sure that you do not overspend to collect the reward points. Being mindful of your purchases and spending behaviour is the way to save money.
