Lots of people are against the use of credit cards. They say it leads to overspending, late fees, and overwhelming interest payments.
I understand their point of view. They make valid points.
On the other hand, there are proven advantages to using credit cards – advantages you wouldn’t get by paying with cash. The biggest one is the rewards you earn, such as cash back, points, and airline miles.
That’s why I’m a firm believer that credit cards are a great tool – but only if you’re a responsible person.
So here are ways to ensure that you’ll be one of those responsible people. These tips will help you get the most out of your credit cards, instead of the card companies getting the most out of you.
1. Pay Off the Entire Balance Monthly
This is the most important tip.
Because by not doing this, you get charged a huge amount of interest. That means you’re throwing your hard-earned money away. So by paying off your entire balance, you save more money.
Think of it this way: Credit card companies should be paying you – through the rewards you earn – for doing business with them. It should not be the other way around.
In addition to this, another benefit you get from paying on time and paying in full is that this helps improve your credit score over time. This will help when you need a large loan, such as a mortgage.
A better score leads to lower interest rates, and lower rates results in huge money savings for you.
2. Set Up Auto Payment
This is related to the first tip, as it’ll help you pay off your entire balance each month.
You see, if you don’t pay your bill on time, you’ll get hit with a late fee – around $25 for your mistake.
But by setting up automatic payments to be sent from your checking account before the bill’s due date, you’ll protect yourself from this. Again, this saves you money.
3. Align Your Due Dates
If you have more than one card, each of them likely has a different due date. The problem with this is that it can be a hassle trying to remember these dates every month.
Imagine the convenience brought to your life if you didn’t have to track multiple dates. By simply calling your card companies and asking them to change your due date so that they all line up, you’ll make this a reality.
The credit card companies will likely comply, because they want to get paid. So you get convenience, and they still get their money – a win-win situation.
4. Check Your Annual Fees
These days, many cards don’t charge an annual fee. However, some cards, such as those that offer more lucrative rewards, do come with a fee.
If you do get a card with an annual fee, make sure you’re going to earn more in rewards than the amount of the fee. That way, you justify your investment.
5. Use Your Rewards
Lastly, of course, is to enjoy your rewards!
If you’ve followed all the tips above, you’ve proven yourself to be a responsible credit card user. Now you can go ahead and enjoy the perks.
Editor’s Note: If you’re interested in cash back rewards, but don’t think you can spend responsibly with a credit card, check out PerkStreet Financial.
How do you get the most out of your credit cards? Leave a comment!