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A lot of people these days blame credit cards for the national debt crisis, but really the issues lies with our inability to control our impulses when buying. If you use a credit card properly, it can end up saving you a good amount of money, and even help you make a little through rewards and perks. If you continue to rack up debt and pay high interest rates on your balances, then of course you will fall into debt, but if you follow these few rules when using your credit cards, you can save a bundle of money instead:
This is the best way to avoid paying extra interest on your credit card debt. Most balance transfer credit cards offer an introductory APR of 0%, so you won’t be paying interest anywhere from 6 months to a year and a half. This will help you make direct payments on your credit card debt and keep you from adding to your debt with extra interest.
Afraid your credit isn’t good enough for a balance transfer card? There are several balance transfer cards that cater to people with average credit, although they usually only offer an 0% introductory period of 6 months, so you’ll need to make payments quickly.
Many rewards credit cards offer the best cash back rewards within certain categories. These cards often offer a base cash back rate, usually 1 point per $1 spent, and then offer upwards of 5 points per $1 spent on things like groceries or gas. To get the most out of your rewards, it is smart to ONLY use these cards on things that will give you the most points.
For example, if your credit card offers you 5 points for every $1 spent on groceries, it is smart to only use that card on groceries. Some cards alternate their categories every 3 months and can highlight specific stores, like Lowe’s, or general categories, like restaurants. Make sure you know which categories you can earn the most points on and use your credit cards accordingly. Here is a quick list of some of the best rewards credit cards.
Credit cards are competing for your attention these days, so many are offering some outstanding bonuses and perks to draw you in. This is perfect for the money-minded consumer who is looking to make a little money off their credit card company. Say the credit card is offering you 40,000 bonus points when you spend a certain amount of money within the first 3 months. If you use the card on things you were going to spend money on anyway, like utilities or other monthly bills, then you can pay it off immediately and reap the rewards of essentially $400 extra that you wouldn’t have had before the credit card. This also works with gift card perks and huge cash back percentages. Here is a quick list of the best credit cards with great introductory bonuses.
If you can help it, avoid any cards that have annual fees. While most cards with annual fees have amazing perks, the annual fee can often outweigh those perks in the long run. It’s smart to do a cost analysis to make sure the fees don’t outweigh the bonuses. For example, if you are paying $80 a year in annual fees, and the intro bonus is only 20,000 points, you will eat through that bonus in 3 years with the annual fees. You could also just cancel the card after you get the bonus and before the annual fee kicks in, but canceling a credit card can hurt your credit score. Here is a good list of the best credit cards with no annual fees.
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