Planning your finances is centred around two aspects. Primary is how to earn more money, and secondary is how you can make the best of your money. You can save money with financial knowledge. Credit cards are a great medium to help you with this. If you know how to use a credit card right, it can give you many benefits. With good financial knowledge, you can squeeze out all the advantages of credit card.
Today we shall look at seven ways you can save hard-earned money through a credit card.
Choose the right credit card
There are a variety of credit cards available. Each of them comes with a different set of rewards and features. You need to know what you are looking for when you choose a credit card. Choose one that matches your spending habits and where you spend your money. A lifestyle-based credit card will give you rewards and discounts on food and entertainment. A shopping-oriented credit card gives you discounts on speciality stores and products. Similarly, travel-based credit cards give you offers on tickets, lounge access, and hotel accommodations.
You should evaluate your needs and pick a credit card that matches them. It will save you a lot of money to enjoy the finer aspects of life.
Choose one with a sign-up bonus
The primary criteria for selecting a credit card are the bank and interest rate. However, most credit cards will offer you similar deals. You should then actively search for a credit card that gives you a sign-up bonus.
This bonus can come in cashback or a free stay at a hotel. Some credit cards also offer you extra points you can use for various purchases. You might have to make other purchases before you can redeem these points. These points have a validity period within which you have to use them.
Transfer of Balance
If you own a credit card with a higher interest rate, switch to a lower one. All you have to do is transfer your balance to the new credit card. There are no charges for a transfer of balance. It will allow you to pay a lower interest rate on the same debt.
You can save your money without accumulating more interest through this process. For example, you can save yourself a lot of money by switching from a credit card charging a 17% interest rate to one that charges 12%.
Pay Credit bill on time
One of the biggest reasons why people using credit cards end up losing money is because they don’t pay their credit bills on time. Your credit bill has a billing cycle within which you have to pay your credit bills. Not paying your bill on time will incur late charges. Moreover, your bill amount will be added to your next billing cycle again with an added interest.
With the accumulated debt, you will end up paying way more. Hence, you should pay your credit bills on time and save yourself the hassle of paying any extra charges. Not paying your credit bill on time will also negatively impact your credit score. A lower credit score will affect your loan rates and any discounts you might get. Hence, there are a lot of financial benefits to paying your credit bills on time.
Wise redeeming of reward points
All credit cards give you reward points when you use the card for any payment. You should maximise this advantage and gain as many reward points as possible. You should wisely use these reward points later. Some of the ways to use your reward points are
- Using to pay a part of the credit bill.
- Using it for an expensive gift voucher.
- Useful merchandise that you otherwise can’t afford.
Some credit cards allow you to convert your reward points into money. You can avail of this option and then use that money to make appropriate purchases that will give you cashback. These are hacks to make the best use of your reward points and save money.
Minimal use of minimum amount due
Credit cards allow you to pay a certain amount of your credit bill if you can’t pay the bill entirely. The rest of your bill amount is added to the next billing cycle. This option should only be availed during financial emergencies. Otherwise, you risk paying extra interest on your bill amount. Avoid the Minimum amount due option in every case that you can. It will protect you from a financial spiral.
Use the credit card for car rental insurance
Almost all credit cards give you rental insurance. However, this mode is availed if you have declined the coverage offered by your car rental company. You should instead pay the rental with your credit card. It can help you save a lot of money in the long run.
So if you have a car, always use your best credit card to pay for the rental. You will see the difference it makes to your finances.