Keeping track of all the new conditions, fees, and changing laws and regulations can leave credit card users confused. Some would rather not even use credit cards because of what they may be missing in the fine print. However, there are some things you can do to hang onto your hard-earned cash today by using the right card and by paying your bill on time.
Finding the Right Card
There are so many choices out there that it can be completely overwhelming to the credit card shopper. However, aside from the no-annual-fee credit card, two things are critical to finding the right one—a good interest rate and either rewards or cash-back advantages.
A good interest rate is crucial, but you have to look into all aspects of the interest rate. Read the fine print on each card so you know your short term and long term costs.
A rewards card will give you savings on purchases that you might ordinarily make. For instance, a good rewards card for a family might be one that gives them a $50 coupon voucher for food purchases whenever they charge up a certain amount on the credit card. Others might offer discounts on car insurance or other necessary regular expenditures.
A cash back rewards card will offer you rebates and other cash back incentives for using the card. Some cards offer cash back on specific items, like dining out, groceries, gas, and even college textbooks. Always make sure you understand the credit card rules on your cash back rewards or you might save cash today only to spend more tomorrow.
How to Use Your Credit Card
If you are using a rewards card or cash back card be careful not to spend a lot of money just for the sake of the rewards. Saving cash today also means not overspending. Don’t lead yourself into thinking you’ll be able to afford that vacation on your travel rewards card if you buy a jet ski on it. You could end up paying more in interest than you would have spent on the vacation if you had paid for it yourself.
Remember that to get the most out of your credit card you should pay it off every month. Never spend any more than you can pay when the bill is due. Credit card companies often don’t like people who do that because they make less money. That makes business sense, of course, but you don’t want them to survive off of you. They make plenty of money from the merchants’ costs. Don’t compromise your own financial survival by paying a small portion of your bill every month.
In the end, cash today is not what it was ten years ago. As a society, we have learned a lot of lessons from credit card problems, mortgage loan snafus, and other financing trends that did more harm than good. Do your homework on make sure your credit card is exactly what you need and can afford.