Credit cards a powerful tool that many people take for granted. Some people tend to rely on them too much, causing unsustainable debts. Somewhere in the middle is the best way to use a credit card not just for convenience, but to save money and build toward a better future. Wondering how it’s done? Follow these tips to save money and make the most of your credit card.
Rack Up Rewards
If you’re confident in being able to pay off your credit card statement, you might want to put as many big purchases on there as you can. Using a credit card to pay for utilities, tuition, and other necessities is a great way to build up reward points. Some cards are far more generous than others, but over time you’ll be able to build up towards cash rebate or airline miles. More than half of credit card users use cards that offer rewards, and receiving cash back is the most popular option. Not all credit cards are created equal, so it’s worth the effort to shop around and see which one offers the best perks. Be mindful that some reward cards charge an annual fee, while many do not.
Use it While Traveling
If you’re on vacation or traveling for work, your credit card is a great way to save money. With most banks charging exorbitant withdrawal fees when abroad. Think along the lines of 1 to 3 percent on top of whatever the ATM charges you. That adds up quickly. Of course, you’ll need some cash on hand while abroad, but perhaps not as much as you think. Using your credit card is an easy way to prevent multiple trips to an ATM. Plus, it’s a lot safer than carrying cash around. If you do end up losing the card, all you need to do is cancel it.
Use it to Easily Budget
Creating a budget isn’t something that most people would look forward. However, by using a credit card you can at least track your spending and get a good idea for where most of your money is going. Looking back on past months can be illuminating, as you’ll often be surprised with some of the things you bought that you may not have exactly needed. If you use a budget tracking program like Mint (a free app), then you can have your spending broken down into different categories to get an easy look your spending.
Shop Around for the Best Cards
It’s not a good thing to apply for too many credit cards, as each new card brings a small hit to your credit score. Also, having too many cards makes spending difficult to track. However, you shouldn’t resist a good feel when it comes up. If you find a card that offers better rates, improved rewards or more flexibility, you should apply. There’s no reason to be loyal to your existing credit card if a deal is out there that will help save you money.
Build Up Your Credit Score for the Future
Out of all the benefits credit cards provide, one of the least noticeable is the effect it can have on your credit score. If you use your credit card regularly and always pay it off on time, your credit score will rise and banks will feel more comfortable lending you money at better rates when it comes time to purchase a home or take out a loan to build up a business. A good loan can save you a lot of money in the long term, so it pays to use your credit card wisely.
Credit cards can be a great way to save money if you’re using them right. Pay the bills on time, don’t apply for too many cards and don’t make purchases you otherwise wouldn’t make. If you follow those rules, you’re guaranteed to see some savings.