How to Save Money with Credit Cards
Credit cards aren’t always associated with saving money, but if you’re savvy about using your credit, you can actually use them to your advantage. Here are some tips to help you save money with credit cards.
Use Credit Responsibly
This seems like a no-brainer, especially if you’ve been reading up on personal finance for awhile. You’re not going to save yourself any money if you pay interest on your purchases, so try to pay your balance in full each month. If you do have to carry a balance, make sure to use the card with the lowest interest rate, preferably during an interest-free period.
Balance Transfer Offers
At any given time, you can find a new credit card offer that comes with 0% interest on balance transfers. This is the perfect time to transfer a balance from a high interest card to one with no or low interest, saving you a lot of money during the pay-off.
Credit Card Rewards
While debit card rewards have gone the way of the dodo since 2007, credit card rewards are still going strong. If you have good credit, you can pick from your choice of preferred rewards, everything from cash back to airline miles and vacation packages. Figure out what reward card works best for you, and take advantage. If you’re diligent about paying your balance in full each month, you’ll get the most savings by putting all your purchases on your credit card to earn rewards. This method will only help you if you don’t pay interest; the interest will negate your earned rewards very quickly if you carry a balance.
How Credit Cards Affect Your Credit Report
Credit cards have a big impact on your credit report. While it’s true that longevity of credit accounts is a factor, your payment history and credit utilization is more important. As long as you keep your balance low compared to your available credit, and you pay on time, your credit score will stay high.
One trick to help balance your credit, is to keep one account open that’s your “longtime” card; keep this open for years and years, even if you don’t use it but once every few months to keep it active. This frees you up to open and close new lines of credit to take advantage of credit card rewards and balance transfer offers, without taking a hit on longevity.
Check Your Credit Report
Always keep an eye on your credit report. I don’t recommend signing up for a monthly credit service unless you want to keep a really close watch, or you have had your identity or credit compromised in the past. Most people will be fine to check each report once per year, for free, through AnnualCreditReport.com.
Some credit card companies offer complimentary credit monitoring services alongside their preferred cards. If offered to you at no charge, take advantage of these services to help keep an eye on your credit.
Always, always be diligent about checking for incorrect entries and false items. Report any discrepancies immediately to the bureau(s).
Review Your Statements
This is something most people forget about. It’s easier to go on auto-pilot and just pay your total balance each month without checking individual transactions, but it opens you up to many liabilities. All credit cards cover you in the case of fraudulent transactions, but you typically have to report them during a specific timeframe outlined in your agreement.
Go through your statements each month and make sure all your transactions are accurate and correct. Report any errors or fraudulent transactions immediately.