Are there credit card tricks that can help me save money? The answer is a resounding “yes.”
In this day and age, having a credit card is important. Unless you can pay cash outright for a house, a car, or a wedding, you will somehow need a credit card.
Even then, you still need a credit card to make a car rental or hotel reservation. But if not used properly, credit cards debts can cause financial hardship. There are certain credit card tricks you can employ to lower your credit card costs and save money.
Here are 5 credit card tricks to save you money
1. Pay More than the Minimum Monthly Payment
The first credit card tricks to implement is to save money by paying more than the minimum balance. Paying just the monthly minimum prolongs the time it will take you to pay off the balance and it will cost you a lot more in interests.
Therefore a good trick is to pay more than the minimum or pay off the balance entirely each month. See How Making Extra Repayments Can Help You Pay Down Your Debt Faster for more information.
2. Use Your Savings to Pay Off Your Credit Card Debts
Why having money sitting in a savings account where you’re getting 1% interest, when you have a credit card balance that charges you 18 to 20 percent in interest.
It makes more sense to use some of that money in your savings account to pay off some of your debts. See also How to Pay Off Multiple Credit Card Debts for more information.
3. Switch to Credit Cards with Lower Interest Rates
A third credit card trick is to switch with credit cards with lower interest rates. Many credit card companies offer that option where you can transfer your balances from a high interest card to a lower rate credit card.
Doing that will save you some money. Use this calculator to see how much you could save by switching credit cards.
4. Take Advantage of the Grace Period
Most credit card companies have grace periods. They can even be from 6 months to a year. During this period, you don’t pay any interest on your purchases. So know when your grace periods ends and pay off the balance before it ends.
5. Don’t Make a Late Payment
Making a late payment on your credit card will impact your overall credit score. If you are late on your payment, your credit card company can report it to the three credit bureaus (Equifax, Experian, and Transunion). This late payment can stay on your credit reports for as long as 7 years.
Also, making late payments also means that more interests and fees are added to your balance. A late payment fee can be anywhere from 0 to $30. And that’s on top of the interest they will charge you. If you pay your credit card debts on time, you will save money on interests.
6. Avoid credit card fees.
While credit cards are convenient, they also com with something called “fees.” Credit card fees can rapidly add up and cost you a lot of money. Some examples of credit card fees are annual fees, cash advance fees, late payment fees, ATM fees and international fees.
So one of the first credit card tricks is to set up an automatic payment. That way you’ll always pay your card on time, therefore avoiding a late payment fee. Another credit card trick is to avoid ATM.
One way to do that is to use cash whenever you can. Using your credit card to withdraw money is a big “No,” because your provider will hit you hard with cash advance fee. Another good trick is shop around and find a credit card with minimal fees. There are plenty out there!
7. Consolidate your credit card debts.
Last but not least, a good credit card trick is to consolidate your credit card debts. There are two ways you can do that. Either you take out a consolidation loan like a personal loan or balance transfer credit card.
If you have a big debt or multiple credit cards, a consolidation loan might make more sense.
On the other hand, if your debt and you have a small balance, then a balance transfer credit card might be better, because most balance transfer cards come with a 0% interest period.
In conclusion, while a credit card is crucial to manage your regular financial activities, you can find yourself in a lot of debt if not using them correctly. So if you do, utilize these credit cards tricks mentioned above to help you save money.