For most, credit cards will usually only end up costing money. Not only do some people feel the freedom to spend money when they otherwise might not if they were using cash or a debit card, but people also often have to deal with paying back credit card debt thanks to high interest rates.
But the truth is that if you are smart about how you utilize your credit card, you can actually save quite a bit of money by being a responsible credit card owner. If you are curious about the most effective ways to save on and take advantage of your credit card, continue reading!
Don’t Own Too Many Cards
To save money in the real world you want to avoid playing a role in the tragedy you’ve seen in television and the movies where a character bashfully tells a cashier to spread an expensive purchase out across a lot of different cards.
Owning too many cards can be a double-edged sword for a lot of credit card users.
First off, you might feel tempted to buy more than you otherwise would and overuse your credit. Secondly, if you’re spreading around your payments on numerous different cards, chances are you’re leaving money on the table by failing to optimize the rewards on any one of your cards. It might take a bit more self-control and strategy, but sticking to one to three primary cards is usually your best bet.
This is probably the most straightforward way to save money on your credit card, but there are a few ways to ensure you get the best bang for your buck. First off, make sure you only sign up for a rewards card if you’re sure you can pay it off in full every month. While it may be enticing to get rewards from your cards, it’s certainly not worth the high interest rates you would pay if you find yourself falling into credit card debt.
Also, you want to work to find the right cashback card. While many cards offer 1 or 2 percent cashback, there are other cards that offer oh so much more. Take the Discover it CashBack Match card, for example. This card offers 5 percent cashback in categories like gas, groceries, and restaurants, depending on what time of year it is. The card also offers up to 20 percent cash back if you shop through the discover store. Retailers such as Home Depot, Target, Walmart, and more are available there.
New Card Sign-Up Bonuses
Cash back is definitely a great reason to get a card, but even thousands of dollars’ worth of credit card payments will only net a small percentage of what you can get when you sign up for a card that offers bonuses for new users.
Take American Express, for example. With their Delta Skymiles card, you can earn from 35,000 to 60,000 miles when you sign up, depending on what deal they are offering at the time. Putting those miles towards your next vacation can save you a whole lot of dough.
This is a great one to keep in mind when considering taking out a new credit card. Say you buy a new article of clothing only to find that is has gone on sale just days later. You just lost out on a bunch of savings, right? Not necessarily if your card offers price protection. Cards offered by several different companies will refund the difference on a purchase up to as much as $500. Of course, you’ll have to offer proof of how much you paid and when, and how much the sale is for, but once you’ve got all that you’re good to go on and save!
Avoid the Costs of Cash
When you’re traveling (especially internationally), it can be quite hard to find your bank that you can withdraw cash from without those pesky fees. On top of that, if you want to withdraw money at home and convert to the local currency you might have to accept additional conversion fees. With Chase’ Sapphire Preferred card, you can avoid all of that. The card is made especially for people who travel a lot and you can avoid transaction fees if withdrawing money abroad.
More generally, credit cards reduce the risk of carrying large quantities of cash. If you lose your wallet, you could be out several hundred dollars if you’re a cash carrier. If there’s nothing in your wallet but plastic, it’ll still be a hassle, but at least you won’t be counting quarters till your next paycheck.
Take Advantage of Extended Warranties
Paying for in-store warranties often feels like a waste of money, not just because up the upsell, but because the warranties largely only last for the first year of ownership. Thankfully, many cards offer a fair and free solution to in-store warranties: an automatic extension of warranties made on purchases with the card.
Offers typically include a doubling of the manufacture’s written warranty for up to one extra year of coverage.
Have a problem with your new phone? Let your credit card know and there’s a great chance that you’ll be expecting a check in the mail to help you cover the cost for a replacement.
Pay on Time and More Than Your Minimum Fee
This might seem like a no-brainer but practicing good payment habits is probably the easiest way to save the most amount of money over the long run. By paying maintaining positive spending practice you’ll avoid large charges and penalties.
Even if you can’t pay off your balance in full, you should still try to pay off more than the minimum because it will save you quite a lot in interest over the long term.
If that’s not enough of a motivator, some cards will actually reward good payment practices. You could even get them to cut you a break in terms of interest rates. It might sound hard to believe, but companies love holding onto card-holders that they know they can depend on. If it means lowering your interest rate, they might be willing to budge.