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Make Your Credit Card Work for You

Credit cards are a fact of life. If you don’t already have one or two, chances are that you receive multiple offers from credit card companies each month, all of them trying to woo you with low interest rates and attractive rewards programs.

Credit cards are wonderful things to have in your pocket, and much of our financial lives revolve around them. We now use credit cards for any and all purchases, which is much different than it was a generation ago when our parents only used credit cards for emergencies. While many people still do abide by the credit card practices of our ancestors, still others rely on credit cards as part of their daily lives.

Credit card companies’ practice has changed a great deal in recent years. Competition is fierce between the companies, and each tries to one-up the other with great deals that are sometimes just that, and sometimes they don’t live up to the hype.

Make Your Credit Card Work for You

Choosing a new credit card, or making the most of the ones you already have, is a great time to assess the best ways to make your cards work for you rather than against you. Read all the fine print then check out these ways that your credit cards can actually make you money.

Always Pay Your Balance in Full

Credit card companies make money by charging interest rates on your purchases. It’s in their best interest when you carry a balance from month to month because you’re paying them for the privilege of doing so. Even if your card has a low interest rate it still costs you money when you only make the minimum payment, and someone at the credit card company is smiling with glee. Pay your balance in full, every time.

If you absolutely cannot pay your monthly balance in full, pay as much as you can, and make sure that amount is greater than the minimum payment required. Keep on the good side of your credit card company and soon you may find yourself in a situation with a much lower interest rate.

Never Miss a Payment

Another thing that credit card companies absolutely love is when you miss a payment. They tack on hefty fees for missed or late payments, and if you don’t nip this behavior in the bud you could find yourself in dire financial straits. The plus side of paying on time is that you may find yourself with an increased credit limit or a lower interest rate. Or both.

Practice keeping a budget and a calendar that alerts you when your bills come due. Or simply set up an automatic payment system with your bank so your credit card bill is paid on time through a debit from your checking or savings account.

Transfer Balances Only When It’s Smart to Do So

While you shouldn’t be carrying a balance at all, one perk that many credit card companies offer is the ability to transfer a balance from another card, usually made sweeter by the promise of a lower interest rate. This can be an unexpected win if you’re in the business of saving money, and many credit cards offer very attractive bonuses when you transfer a balance.

For instance, the Chase Slate card offers no fee if you transfer a balance within the first 60 days. To sweeten the deal they offer 0 percent interest for 15 months on purchases and balance transfers. This is a fantastic opportunity to pay balances in full while saving money on interest charges. Check out the wide array of cards that offer perks for balance transfers, and choose the one that will allow you to pay that balance off quickly and inexpensively.

Know Your Credit Card Perks

Airline miles, hotel stays, and free gasoline are just of few of the perks that credit cards offer within their various rewards programs. While it may seem downright impossible to choose a rewards card that is right for you, it’s worth it to spend the time comparing each program carefully and making the decision that will earn you the most benefits.

First if all, compare the costs of the cards. Annual fees can end up reducing your bonus rewards significantly, so do the math and choose the card with the fee that reaps you the most rewards, or look for a card with no annual fee, although the rewards might not be as high. In some cases you can ask the card company to waive the annual fee, but this is discretionary and might not always happen.

Be sure that you choose the card with bonus points or rewards that you will actually use, and that purchases you’re likely to make often accumulate those rewards. For instance, if you travel by car in the United States a great deal, then the Blue Cash Preferred Card from American Express is your best choice. You’ll earn 3 percent cashback on all gas purchases.

Use Your Card for Expensive Items

If you plan to make a large purchase soon, definitely put it on your credit card. Even if you have the cash on hand to purchase the item outright, such as new appliances, it’s a much better idea to use the card then pay the balance in full.

Why? Many credit cards offer additional warranties on items, especially appliances. So while you will have a manufacturer’s warranty, and sometimes an additional warranty offered by the retailer, your credit card can back you up in the case that something goes wrong. And when your new washing machine explodes and the manufacturer drags their heels you’ll be glad for the extra protection offered by your card.

Credit cards are very important aspects of our financial lives and it’s important that you get the most out of your relationship with these companies. Utilize your rewards and never let those points expire, always pay your balance in full every month, and take advantage of balance transfers when necessary. The results are not only a source of revenue and discounts for you, but you’re also making sure that your cards are working for you, and not the other way around.

Images: “Low key macro shot with old credit card./Shutterstock.com

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I'm Rehan Ijaz, a business graduate with specialization in Finance. I am passionate about writing articles and blogs specifically related to Business and Management. My areas of interest are strategic decision making and digital business strategy (fusion of IT strategy and Business strategy).

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