Depending on your past experience with credit cards, you might feel that these plastic cards and debt go hand-in-hand. And for some people, this is certainly the case. However, a credit card in your possession won’t necessarily put you on the fast track toward debt. It’s all about responsible use; and once you have a firm grasp on the right ways to use your credit card, it can become your best friend – helping you establish credit and save money.
Now, saving money with a credit card might be a far-off concept, especially if your debt level says otherwise and you’re currently paying a ton of credit card interest each month. But given the perks and features available with most credit cards, getting the right card can keep cash in your pocket.
1. 0% Introductory Offers
If you're working to pay off balances on your credit cards, you might employ the snowball method, stop using the cards and pay more than your minimum each month. These measures help, but you can reach your goal quicker using credit cards with 0% balance transfers.
You might not like the idea of moving debt from one credit card to another. But after doing the math, you may realize that a balance transfer makes good financial sense.
Let’s say you have two high balance credit cards, both with a 19% interest rate. If you only pay the minimum each month or even double the minimum, it’ll still take a while to pay down your balances. On the other hand, if you get a balance transfer credit card with a 0% introductory rate, and then transfer both balances to this card, you’re able to pay off the balance faster since you won’t incur interest charges during the introductory period, which is typically the first 12 or 18 months of opening the account.
2. Rewards Programs
Sign up for a credit card that features a rewards program and you can save money on a variety of categories from travel to dining out.
The concept behind a rewards program is simple. After you’re enrolled, use your credit card for purchases, such as gas, groceries and entertainment; and for every $1 you spend with the card, you will earn at least one point or mile.
Points can quickly add up based on your shopping habits, and there are opportunities to earn double or triple points in rotating categories. Also, some credit cards offer sign up bonuses. For example, you might earn 50,000 bonus points if you spend $2,000 on the card within the first three months.
Once you accumulate enough points, redeem them for gift cards, airline tickets, hotel rooms, cash and much more. It’s a savings account that you don’t have to think about.
The more you use your credit card, the more reward points you accumulate. However, only use your credit card heavily if you’re able to pay off charges each month.
When it’s all said and done, you ultimately control whether you have a positive or negative experience with credit cards. Don’t think of plastic as a way to get stuff that you can’t actually afford. Think of it as a tool to help you save on debt and everyday life.
Readers: Have you ever taken advantage of balance transfer or reward programs to save money with your credit card?