Past economic recessions have made people more and more displeased with their banks. Banks now have high interest, credit card fees, and some may not provide satisfying customer service leaving the customers wanting change and better treatment.
Ever since the Credit CARD Act of 2009, banks have made a step in the right direction towards better service, fees, etc. However some customers have found ways to outsmart credit card issuers and make the system, flaws and all, work for them.
If you’re interested in some ways you could outsmart your issuer, read below for more information.
How to Wisely Use a Credit Card & Rewards
1. Never Carry a Balance
Make sure that you never carry a balance when you use a credit card. This may be considered one of the most important steps you can take when you use a credit card. So make sure you pay your balance every month, and you’ll never have to pay a dime in interest or fees.
Even better, you could be earning interest on cash you held onto from the time you make your purchase, to the time your statement becomes due. That’s up to 50 days in interest gains!
2. Keep a Clean Card
If you are unable to pay your balance in full every month, but are steadily reducing your total debt. You might be able to take advantage of the perks credit cards have to offer, but you also don’t want to increase your debt.
If you only have one card and are already in debt, you should focus on paying that card off before opening any new accounts. However, if you have more than one credit card, you can continue pay down your existing debt without incurring interest on new purchases.
You can keep one card “clean” by paying its balance in full every month. As stated above, when you pay a card off each billing cycle, you avoid paying any interest or fees.
This is not so if you continue to charge new purchases to cards that are already carrying a balance. When you carry a balance on a card, you incur interest on all new charges to that card at the moment of purchase.
Thus, as long as you pay the balance of the “clean” card in full every month, you can use it without worrying about incurring interest on your purchases. Just make sure that you never spend more on the “clean” card than you can easily pay for in full, while paying more than the minimum on your cards that carry a balance.
3. Know Your Statement Closing Date
If you pay in pull between every payment period, you’re essentially receiving a free loan from the bank until the end of the payment cycle. Federal Law now requires that banks offer a 21 day grace period between the date your statement closes and the date your bill is due.
Because of this, if you make a purchase a day before your closing date, you will have 21 days to pay it off before it starts to gain interest. Complete a transaction the day after the cycle closes, and you will have an additional month until the next cycle closes, plus another 21 days to to pay off your balance.
4. If Traveling Outside the Country, Use the Right Card
The reason you’d use one card over another is based on the rewards you could receive and the fees that you can gain if you make payments out of the US. Some cards may be great for traveling in the US. They can gain a bonus amount of points of certain purchases that you frequently make, and have rewards that suit you.
Even though that card may be great for travel all around the US, it may not be the best when you go over seas.The reason being is because the card used within the US may have foreign payment fees. You use the same currency all the across the US, but it you were to leave it, say to Europe, every time you swiped your card, you could be made to pay a fee. This fee could be either a percentage of the cost or a fixed fee.
5. Get a Huge Sign-Up Bonus
If you’re a big spender, with the right card you could get big rewards. However, not all of us are able to spend that much, so we have to get creative in ways that earn us rewards.
- Airlines Need to Unload: Some smaller, troubled airliners may be desperate for customers and are willing to sell miles by the millions for cash to banks. These banks are able to reward their card holders with miles for purchases.
- Anything You Draw In: Banks are so anxious to find new customers with good credit that they have been doling out unprecedented sign-up bonuses to attract them. For example, one bank recently offered 75,000 miles on American Airlines to sign up for a credit card.
The result of all these bonuses creates an easy way for good credit scores users to get bonuses that they can use as an extra bit of cash or miles. You must be patient though, because frequently opening a lot of accounts can lower your credit score.
6. Choosing the Right Card
Always be sure to select the right card for you. There are hundreds of different cards out there that have different rewards and point systems that may suit you the best.
Despite owning a card and being a customer for many years, you can still frequently receive an ad in the mail for yet another card. Remember if you frequently change and open new accounts it can lower your credit score, so be sure to do it seldom if you plan on changing credit cards.
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Bottom Line
Make sure to not use your cards blindly. Note and learn about additional fees you may incur, and pay your balance off each month to avoid interest.
Take advantage of any perks you can to be sure your credit cards are acting as the valuable financial tools they should be. If you find these posts informative, be sure to check out more of the on HMB! Also check out our posts for the Best Bank Bonuses and Best Bank Savings Rates!
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