Credit cards can be your best friend–or your worst enemy.
They seem like your best friend when you’re on that shopping spree. You can walk away with virtually anything you want. All you have to do is hand over that little piece of plastic.
But then the bill comes and interest and late fees start piling up. You realize that innocuous little card is really a wolf in sheep’s clothing. If you’ve been caught in this trap, you may have sworn off ever touching a credit card again.
But did you know that there is a way to make credit cards your friend again?
If you learn to use a few credit card tricks, you can beat the bank at their own game. You can even earn money in the form of points, rewards, and account credits. If you play your cards right, you’ll get all this without paying the bank a dime.
Would you like to learn how? Keep reading for some great tips!
Mastering Credit Card Tricks
The average American household carries almost $16,000 in credit card debt. Interest rates vary, but regardless banks are making a killing off of this.
From the consumer’s point of view carrying a balance is the absolute wrong way to use a credit card. Yet 65% of credit card holders do exactly that.
The bank only requires that you pay a minimum balance each month. Many consumers are only too happy to do just that. After all, they’re paying what they have too, right?
They keep racking up more and more debt buying things they can’t afford. Pretty soon, they’ve reached or exceeded that $16,000 statistic and don’t know how to get out of the hole they’ve put themselves into.
Don’t be one of those foolhardy consumers. Master these credit card tricks to put that plastic to work for you, instead of working against you.
Pay On Time
Always pay on time. There’s nothing more senseless than paying late fees simply because you forgot to pay the bill.
Set up a reminder alarm on your phone or download a free app to track your bills. Set up automatic email reminders through your online banking account. Write it down in your day planner. Do whatever you have to do so that you remember to pay it.
Not only does this help you avoid those unnecessary late fees, but also it does wonders for your credit score.
Your payment history has a huge effect on your credit score as it’s calculated at 35%. Even just one missed payment can leave a nasty mark on your score. Do yourself a favor and take advantage of this easy way to maintain a good score.
Note: Always pay your bill on time, but be mindful of paying too early.
Credit card companies often count payments that are made between your statement’s closing date and the payment’s due date. If you pay before the closing date, it’s possible that your payment won’t show up for that cycle.
This is usually easily resolved by a call to the bank. But if you don’t notice it, you won’t know to contest it. However, you can avoid the problem altogether by following our next tip.
Pay Your Entire Bill
Are you wondering how to beat interest on a credit card? It’s quite simple, really. Don’t mess around with that minimum payment business. It might seem tempting because it feels like you’re saving money.
But you’re absolutely not.
In fact, you’re costing yourself a great deal of money by racking up interest. With average credit card APRs hovering around 20%, that adds up really quick.
On the contrary, if you pay your entire bill on time every month, you’ll never pay a dime in interest. That means you’re basically constantly getting a free loan.
Of course, it’s pretty short term, but there is a way to extend the time-period you have to pay it back. Take a look at our next amazing credit card trick.
Capitalize on Your Statement Cycle
Need to make a semi-large purchase? You can use a credit card to get yourself a free loan and almost 2 months to pay it back.
Sound too good to be true?
It’s actually pretty easy. You just need to learn how to make something not show up on your credit card bill until the next cycle. It’s simply a matter of the right timing.
Take a look at your payment due date vs closing date of your statement. The closing date will generally be about 20-25 days before your payment is actually due.
If you make a purchase the day after your closing date, it won’t be due until the next cycle. That means you get an extra 20-25 days to pay it back.
If you need even a few more days, sometimes you can request to change your due date and move it around even more. You can only use this option sparingly, however, and isn’t something you should count on very much.
Set Your Own Limits
In most cases, your credit card limit will be higher than what you can afford to pay each month. Banks like that because consumers are tempted to use up to their limit. Then, when they can’t pay it all off on time, the bank start making money on the interest.
Are you one of these that has a hard time not using up to your limit? Don’t tempt yourself. Request a lower limit so that you can’t overcharge and stretch yourself.
This isn’t the best strategy for your credit score. Using less of your available credit gives your score a boost. But if you don’t have good self-control, it’s better to limit yourself and not overspend.
Check Your Spending
One of the benefits of paying cash for everything is that you tend to notice more when it disappears. When you use your credit card, you don’t feel the hit as much. Five dollars here, ten dollars there add up really quick, but you might not realize it.
To help with that, you should log into your online account about once a week and keep an eye on your purchases. This will help you keep track of where you are spending money and how much. Plus, if there are any mistakes it will be easier to catch them.
Follow Your Budget
There is a little-known trick that can save you a lot of time and money – BUDGETING! Create a simple budget for your expenses by subtracting them from your earned income each month.
This provides you with a better financial picture as to what you can and cannot spend. This will also allow you to visually see how much you can pay down towards your debts to avoid those pesky interest charges or even late fees. This will also allow you to save and give every dollar a purpose and should keep you on track from overspending.
Make Money Off the Bank
So far, most of what we’ve talked about is how to beat interest on your credit card. Now it’s time to learn how to make a bit of money off the bank.
Cash In On Sign-Up Bonuses
Many credit cards offer great sign-up bonuses. If you have good credit, you can generally qualify to open new credit cards easily.
Be wary, though. If you would be tempted to max out all your cards, it’s better to stick with fewer cards.
With more cards, it is also more confusing and the likelihood of missing a payment becomes greater. If you organize yourself well, though, you can cash in on some great bonuses.
Sign Up for A Rewards Program
Pick a card that offers a rewards program. Make sure that you’ll earn rewards on either all your purchases or in categories that you’ll use.
This is a great way to capitalize on purchases that you have to make anyway. It’s a small percentage but every little bit helps.
There are many ways you can receive these awards. You can get cash either by check or as an account credit. Some rewards come in the form of airline miles or hotel loyalty points. You may even be able to win gift cards from Amazon or other great companies.
Look For Cards With Perks
In the same vein, look for cards that come with perks. Many travel cards offer great benefits like travel insurance or rental car coverage.
That can save you a lot of money when traveling. And you’ll get these perks for free if you take our advice and pay down/off your balances all the time and on time.
Be Smart About Credit Card Use
With just a bit of research and restraint, you can start putting your credit cards to work for you. If you’re already in a lot of credit card debt, stop using your cards until you can get them paid off.
Then, start using them according to these guidelines. You’ll be amazed at the difference. Instead of paying the bank excessive interest fees, the bank will be paying you to use their card.
For more great tips and credit card tricks, check out our blog. We’re always adding new resources to help you stay financially healthy.