Credit Cards: How to Get the Most Out of Them

Credit Cards: How to Get the Most Out of Them July 5, 2013

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.

Why?

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!

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  • Tom

    Nice post. I really liked the idea to align your cards withy the same payment date. I have two cards that’s primarily use and there’s. seven day gap between both payments are due. I need to just give my credit card company to make both dates the same.

  • Rose

    Here’s another real plus. I have seen my credit scores skyrocket since I have begun to pay my credit cards off each month. I was shocked how rapidly it happened.

  • Darren, this is an eye-opening article. Point #3 carries extra weight for me and I think its something that I should try and see whether my cards payment dates can be aligned, it will definitely remove lots of heaches for me. Additionally, I think having a budget and charging only those budgeted things would help. At times its easy getting carried away with purchases :)

  • I agree with Darren on all the points, especially the monthly payoff idea. Having a perfect plan of repayment will not only help you in paying off the debt quickly and smoothly, it will also help the company to spend less money on arranging special agencies to collect the debt, in case of default. So, it’ a win-win situation for both if you pay of your debt on time, especially through automatic payment.