Basically, credit cards are designed to bring convenience to card holders. These plastic cards generally work to give off convenience by eliminating the need to carry cash. However, if they are used irresponsibly, credit cards can also lead to financial breakdown.
In addition to being a responsible card holder, consumers are also advised to thoroughly understand how they can save money with their credit cards.
Ways to Save Money with Credit Cards
Several consumers think that for them to save money with their credit cards, they should pay off their entire balance every month. Once they do this, they no longer need to worry about the interest rates or late fees.
That is true, but according to credit experts that notion is not applicable in all instances. Interest rates should vitally be considered, especially by those people who are planning to use their cards to transfer a balance. In this case, credit cards with low interest rates should be opted.
Moreover, consumers should carefully choose their credit cards in order to save money. They should not miss checking if the credit cards they plan to get have annual fees or rewards like cash back or airline miles.
Meanwhile, Bonnie Smith, of Creative Financial Centre, gave out a warning by saying that although rewards are viewed as helpful, individuals should not choose a card just because of its rewards. He said that these rewards oftentimes go away just before they can be seized. What they frequently do is lure people to spend more money.
Understanding the credit card Companies' Scheme
Another way to save with credit card is to get a zero percent card. However, Smith clarified that zero percent cards offer zero percent interest only for a given period of time - oftentimes, it is a relevantly short period. Afterwards, it can go as high as 12.99 percent or even up to 30 percent.
Smith emphasized that the best way to save money with a card is to pay off the bill every month. Consumers should always make sure they are paying the minimum on time. However, this alone is not enough. Smith said that consumers should also ensure paying their bills right on time. He explained that once a consumer receives a late fee, credit card companies can modify the interest rate - they can increase the interest rate not only on one card, but the entire credit card owned by the consumer.
It was also said that transferring a balance can make a consumer stagger in paying for the interest rate. This will not be applicable unless a consumer will pay off his balance in full.