Credits cards are frequently blamed for recent debt woes and also other consumer-related problems currently prevalent in modern society. In fact, a large part of such problems result from plastic money misuse or consumer ignorance.
Of course, there is no denying that apart from the exorbitant expenses of owed a credit card, plenty of innocent customers have also been the targets of dubious tactics used by some credit card issuers.
Unfortunately, only very few consumers seem to be understand about proper uses and the actual costs of credit card. Otherwise, the reality would have been identical very different today. As a matter of fact, just like mortgages, credit cards can beneficial on your personal finances too.
1) Carefully choose your card
These days finding new cards with innovative features have become a little too often. For that reason, go for a card that suits your requirements, and avoid those which are offered as 'free' cards.
For example, if you travel often, choose a card that is tied-up with your travel company and can give you attractive travel discounts. This way you can easily get discounts on your travel and earn reward points too. However, if you do not want to have revolving credit and want to pay the whole bill, you should choose a charge card.
2) Familiarize yourself with its features and usage
After getting the card, go through its available features carefully. Most importantly you should know where and how to use your card, whether it is possible to withdraw cash on it. If the card, for example, offers rewards points on purchasing fuel through it, then paying cash at gas stations might be a bad idea. Instead use the card whenever possible, built up reward points and you can get free fuel after awhile. However, always pay in time, otherwise you may end up paying more for your fuel. Likewise, making cash withdrawal from the ATM machines of other banks will be subjected to an additional fee, then it is a good idea to withdraw cash only from the ATM machines of your own bank. There is no need to pay extra money for your laziness.
3) Use your card wisely
Sensible use of plastic money can result in lower purchase costs too. These days many credit cards offer tie-ups with other commercial establishments, and getting 25 percent discounts (sometimes more) is a usual affair. Moreover, credit card purchases are commonly paid after a one month lag. You, therefore, save about one-month of interest cost when using credit cards. Credit cards expenses sometimes earn you reward points which can be redeemed at any time in return for usable items.
4) Consider cash back rewards
Many cards today offer cash back rewards (commonly 3-5 percent) on your spendings. But it would be better if you could find a card that will deduct the balance with cash back amount or if possible find one with better cash back offer. Also, cash back is useful only if there is a high money turnover. If you do not use the card often, you would lose on APR. Since reward credit cards can have higher Annual percentage rate (APR) than other credit cards. Usually, cash back only makes sense when you pay your credit card bills on time and in full every month.
5) Choose co-branded cards
These cards bring in extra reward points when used for a certain category. But the use of co-branded credit cards calls for closer scrutiny of the advantages you'll receive. Additionally, while choosing a card, it's important that you choose for a card that not only will best serve your requirements, but also adds maximum values to your financial situation.
6) Complimentary insurance and other benefits
Frequently cards also offer complimentary baggage insurance, accident insurance, access airport lounges and various other perks. Try to check for such benefits and take advantage of them wherever possible.
7) Use your card to pay for utility bills
You can regularly earn reward points by paying your insurance premium, phone bills, and electricity bill using your card. As always, try to your card in fill and on time to avoid costly late fees, which can eliminate the benefits of your rewards points.
8) Consolidate your expenses
Consolidate your expenses with a single card so that you can pile up your points faster.
9) Try to pay in full every month
Credit card reward points are only worth it if the card is paid in full each month. This is due to the interest fees from one month spending can quickly wipe out the offered benefits of any reward points you earn.
Of course, one of the reasons of outrageous interests on plastic money (up to fifty percent) is when you have more than one month interest-free on credit card transactions. But, surprisingly, the so-called '30 days grace period' on card purchases are only valid if you have no outstandingings. And, if you're already revolving, then each fresh purchase will attract cost interest from the purchase date itself. And, 'grace period' is good only for retail transactions. Cash transactions often attract an interest charge from the transaction date until the settlement date, they may also attract service charges and transaction fee.
10) Try to pay on time every month
If you can not pay off your card in full each month and want to revolve, then do not make it worse by paying late, otherwise, you may end up paying a lot in late charges alone.