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The average U.S. consumer has 2.63 credit cards. Are you putting your credit cards to their best use? Your cards go beyond giving you credit for purchases — in fact, you can actually make money with your credit cards. Here are three ways to do just that.
Credit card companies make money by charging interest rates against the balance held on your card. Some interest rates are more than 20 percent for store cards and bad credit cards, which add up fast on larger balances. A balance transfer moves your card balances from one card to another, ideally going from a high-interest card to a lower-interest card. You’ll then have a lower payment, as well as a reduction in the interest you pay when you carry your balance. Balance transfers do have fees associated with them, but some companies offer free or low-fee balance transfers as a way to encourage you to move your balance.
Some credit cards provide points redeemable for airline miles, hotel nights, and other rewards. You accumulate points through purchases made on the credit card. For some credit cards, specific purchase categories accumulate points faster, such as buying groceries or gas. Other cards offer the same point accumulation no matter what you’re buying with it. When you run your monthly purchases through these cards and pay off the balances in full, you get points simply for doing the same things you’d be doing anyway. Instead of using a debit card to no benefit, you get expensive flights, hotel nights, and other perks.
If you don’t care about the standard point rewards most credit card companies offer, you can also make money directly with your credit card. A cash back promotion gives you a certain percentage of your purchases as a cash reward. Percentages between 1 percent and 6 percent are common, with higher percentages typically reserved for specific purchase categories and subject to a spending cap.
You have to spend money on bills, food, and other essential purchases, but using your credit cards can give you money and rewards for your typical routine. A healthy credit card mix gives you access to multiple promotions so you can maximize your perks.
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