When it comes to managing your credit card wisely, a few smart strategies can help you make the most of your purchasing power while avoiding unnecessary costs. Many credit card holders overlook simple yet effective ways to maximize their benefits and minimize fees. Whether you’re looking to earn rewards, save on insurance, or simply maintain a healthy credit score, understanding these key tips can lead to significant savings and smarter financial decisions. In this post, we’ll explore various ways to use your credit card to your advantage, from avoiding annual fees to handling big purchases strategically. Let’s dive into the essential tactics for navigating the world of credit cards!
1. Avoid annual fees. Most of us don’t need the “perks” that come with a for-pay credit card.
2. Use it like a debit card. Use your credit card when making purchases or paying bills, and pay off the balance each month. Rack up the reward points without paying finance charges!
3. Rewards. Look for a credit card that offers cash back on your purchases. Apply the cash to your account to pay your bill.
4. Rental car insurance. Credit card companies offer rental car insurance when you pay for a rental car with your card. The insurance provided is secondary to your existing insurance policy, but replaces the expensive collision damage waiver (CDW) insurance offered at the car rental counter.
5 . A favorable foreign exchange rate. Most credit cards offer a more favorable exchange rate than you’ll get at most banks and ATMs.
6. Avoid cash advances. Don’t use your credit card as an ATM machine, except in an extreme emergency. You’ll get charged 3-5% for taking out the cash. Plus, credit card companies can charge very high interest rates on cash advances – upwards of 20%.
7. Time your big purchases. Wait until the day after the closing date of your credit cycle. Then, make the purchase on the day after your closing date. The payment on that purchase won’t be due until the next month’s bill is due.
8. To increase or not to increase? If you’re offered a credit limit increase, take it if you know you won’t ramp up your purchases. Having additional credit available to you positively affects your credit score — as long as you don’t increase your spending, as well!
Shop safely, and contact us when you’re ready to shop for a new home!
