Using your credit card the smart way can help save money even when charges are made on the card. When one thinks of owning such a card, one does not necessarily think about saving money. Rather, high interest rate is the first thing that pops into mind. The mistake that people often make is selecting the wrong card and this ultimately causes them much harm. If you utilize the card responsibly, you would actually end up saving a lot. In this article, we will look at some of the ways in which credit cards can be used to save money.
Get into the habit of paying more than the minimum as well as ensuring all payments are made on time. There are numerous benefits of paying more than the minimum such as you will reduce the credit utilization ratio, improve credit score, save money on interest etc. This coupled with timely payments can help you avoid exorbitant charges levied on your account. Paying the monthly balance in full is even better. However, if you are unable to make that happen try to at least pay more than the minimum as this will help you save money on interest in the long run. A number of credit card companies are known to reward their clients for this kind of behaviour.
Select a credit card that specifically meets the needs of your lifestyle. For instance, if you travel in your own vehicle to and fro office every day, you could opt for a fuel card. Banks and other financial institutions have tied up with oil companies so as to offer different kinds of benefits to their clients. In case you travel by air often, a travel card is a must have. Such credit cards offer benefits like free air miles and lounge access among other things. If you belong to a joint family, you could consider a shopping card that offers discounts. It is important to note that just because a credit card says it provides rewards it may not actually be the most rewarding for you. Keep in mind your lifestyle needs and select one accordingly. Additionally, when you opt for the right card that meets all your needs it can help you save money and improve credit score. An important point to be noted is that you should not hold multiple reward cards. What usually goes wrong in this case is that when you have several such cards you may not be able to accumulate sufficient points on any one so as to make it worthwhile. It could also cause you to overuse your credit.
If you share a good long-standing relationship with the card company, you could talk to them about lowering your rate. Chances are that if you have a good credit score then your credit card issuer might actually agree to waive certain fees. Banks and other financial institutions want to keep hold of their good customers. Hence, they may actually agree to your request of lowering or waiving annual fees and other charges.
Managing your credit cards the right way is a good first step to building and maintaining an excellent credit score. And when you hold a good score, you tend to get the best deals from loan providers and other credit institutions. Financial institutions will offer you the best deals and charge low interest when your score is close to 900. It is thus very essential to handle your cards well so as to improve credit score. Some of the ways you could improve credit score include paying all your bills on time, keeping your credit utilization low etc. A good score can help save money which would otherwise have been spent in high interest charges. Thus, it is very important that you handle your credit cards well and utilize it in such a manner to improve credit score as this can get you the best deals from financial institutions.
Finally it is important that you compare all the credit cards available in the market before settling for one. Do not be blindsided by all the lucrative offers that credit card companies may offer. Be sure to select one that matches all the requirements of your lifestyle. Also do not be reckless, instead handle your credit card well. Your priority must be to save money. Responsible credit card usage can help you improve credit score without taking on more debt.