How to Save Money Using Credit Cards without Paying Interest or Charges
The title may sound strange, as “how to save money using Credit Cards”, Well don’t worry we will get there shortly.
The Vicious Circle of Debt
In today’s world every other person is in debt mostly due to Credit Cards, Car & Personal Loan, Mortgage etc. You use Credit Cards for your daily expenses, however end up in purchasing luxury products. These luxuries you normally cannot afford in your monthly income and are out of your payment capacity. With time the interest piles up and you get stuck in permanent vicious circle of minimum payment and debt burden.
Due to the same reason among various circles Credit Cards are now considered as Evil product. People avoid using them and advise their friends and family to stay away as well.
From the banks or financial institutions point of view, Credit Cards are the highest grossing money making product. These companies charge huge interests on the revolving balance i.e. if you only pay minimum or less then total amount by due date. Plus, there are various late payment and over limit charges as well. These charges eventually benefit the financial institution but your debt keeps on getting worse.
So, what’s the catch in this product?
Why most of the people still interested in applying for Credit Cards?
Well usually its human nature & is very satisfying having additional capacity to spend. However, this feeling of security you feel at that point of time is temporary. Eventually you end up spending more than you need.
Credit Cards Can Save Money
Despite all of the above Credit Cards are not fundamentally bad. They are effective tools to manage day to day finances securely. Whats lacking here is Management of Funds. If you don’t manage yourself or over spend you can lose money in business or stocks as well. Actually, universal spending law of “Paying what you can and buying what you need” applies on Credit Cards as well.
Credit Card is an amazing product. Its just like all other products that you use in your daily life. For example, you can hurt yourself while driving if you don’t follow rules. If you don’t eat healthy you may get sick. Guns are dangerous and you can harm yourself if you don’t know how to use them. Same scenario works for Credit Cards. If used wisely while being aware of all the terms and features of the product, you will end up enjoying the benefits. With secured payments and availing maximum offers you can save money by using credit cards from your daily spending.
Credit Cards Exciting Offers:
- Free or discounted Cinema Tickets
- Discounts on Flight bookings
- Offers on Hotel rooms
- Rebates on Fuel or Grocery purchases
- Discount on School Fee and Hospital Bills
- Free Travel and Purchase protection insurance
- And above all its safe to carry Credit Cards then cash
How To Save Money Using Credit Cards
Here are some recommendations. Following them, you will never get stuck in debt trap and actually save money while using credit cards
Pay in Full (PIF)
- Always make full payment. Minimum or less then full payment will allow the issuing bank to charge interest on your accounts average daily balance.
- Use credit card as a payment tool, which you must pay in full by due date. Delaying your payment will result in high interest and late payment penalty which also extensively damages your credit score
Restrict yourself, Avoid Temptation
- Only spend for what you really need and can afford in your monthly income. You must stick to your budget. Use credit card for buying time plus availing discounts only
- Don’t spend your credit card more than 50% of your Credit limit
- Regularly avail points and rewards crediting with every transaction you make on Credit Cards
Always Remember The Dates
- Always remember your payment due date and your bill generation date. Bill generation date is important because it allows you to calculate and make expenses. At the same time avail maximum time slot for making the payment. For example, if your bill generation date is 15th of every month and your due date is 30th of every month then every transaction made after 15th will be due for the next month payment. This allows you period of 45 days approximately to make the full payment
- Try having maximum 2-3 Credit Cards and with limits within your payment capacity. Now why 2-3 Credit Cards? It’s because banks are providing various facilities like e.g. cashback, cinema discount, fueling discount, Air tickets discounts, Premier lounge free services, School fee and Utility bill payment discounts. However all these facilities are not available in any one card. So, try to review few banks products and select Credit Cards which collectively provide you all these discounts. And if you use them smartly making full payments every month, you will end up saving a lot of money without paying any penalties, fee or charges to the banks
- Some Credit Cards provide Travel and Purchase protection insurance. Its very important that you inquire about such facilities before applying for Credit Card.
- Before getting a Credit Card you must make a proper research at your end. Analyse which Credit Cards are providing the maximum discounts, offers and services. Don’t look for the higher or lower interest as you are not planning to pay any
- Discuss the product with your Relationship Manager. Get full details and ask as many questions as you can based on your research. Don’t hesitate or shy away, nobody knows everything.
- Don’t make any random decisions
Be Cautious When Using Credit Cards While Travelling
- Never withdraw cash from your Credit Card. In this case high interest is levied on daily basis on your outstanding balance
- One more very important point if you are traveling. When you visit any merchant, they may ask you for the transaction to be in the local currency or your home country currency. ALWAYS OPT FOR LOCAL CURRENCY. It will save you from any extra interest or high conversion rates to be charged. Also, most Credit Cards charge foreign transactions fee. So, if you are more frequent traveler, verify the same before applying. Ideally, its best to use Credit Cards for booking hotels and air tickets to avails discounts and save money. Try to use cash or debit card for shopping, restaurants and other minor expenses
- Use Credit Cards only for your monthly expenses but always be compliant to your budget spending
- Make payments in full every month before due date
- Be aware of all the discounts and facilities that you are eligible for and avail them wisely
- Use your rewards points smartly
- Use your credit card as a replacement of your cash payment and not for buying luxury products which you otherwise cannot afford
If you follow the above recommendations, then surely you will never get stuck in debt. You will manage to save money using Credit Cards without paying any interest or charges to the bank. The key is managing the funds properly and staying in your income bracket
Also read our article “Making Money Online, Myths, Lies, Ideas & Opportunities”