Credit Card

The Best Ways to Take Advantage of your Credit Card

Many of us have credit cards and they can be an extremely convenient way to spend money. They allow more security for online payments, mean that you do not have to carry much cash and give you interest free credit on most purchases. However, there are ways of using a credit card which will help to save you money.

Firstly it is wise to set up a direct debit to pay off the full outstanding balance of your credit card each month, just after you get paid. This will allow you to keep control of the card and never pay any interest or fees. You can use it for convenience, safe online payments and so that you do not have to actually pay for items until you get the bill. In the meantime you could be keeping the money in a savings account earning a bit of interest, rather than spent out on items. Most people that have credit cards actually do this and find that it works very well for them. If you do have outstanding debt, then it is a good idea to see whether you can pay it back quickly. This will help to save you a lot of money as the interest rate on credit cards can be high compared to some other types of lending.

Some people get rather worried about credit cards as they think that it will lead to them getting into debt. Setting up a monthly direct debit to pay off the full outstanding balance is a good way to make sure that this does not happen. However, it is also important to keep a close eye on how much you are spending as if you spend a lot then you may find that there is not enough money to cover that cost. This is easy these days though as you should be able to do it using online banking. Just checking every week or a few times a week will allow you to see how much you have been spending on the card and you can make sure that you will have enough money to pay it back. If you cannot get online banking or do not like it, then keep a written record of what you are spending so that you can more easily budget.

Interest free credit cards are something that some people use to take advantage of cards. They can be very beneficial but you need to watch out for some possible pitfalls. Some people will take out the card and spend on it up to the credit limit, then just pay back the minimum required until the interest free period runs out and then pay it off. In the meantime, they will put the money that they would have spent on paying for the items or paying off the full balance of the cad, into a savings account where it will gain interest. Then when the interest free period is up they will pay the card off in full with the money that they have saved up and have the interest they earned as extra. When interest rates are high on savings accounts, this can be a significant chunk of money, but even when they are low it can still be some free money, which you would not have otherwise have had. The problem with interest free cards is that when you do have to start paying interest it is likley to be significantly higher than the interest on standard cards. This can mean that if you do not manage to put enough money aside to pay the card off in full, you could end up paying out a lot of money, so you need to be aware and careful of this. Some people will be tempted to transfer a balance from an existing card to a free card. Although in theory this sounds like a good idea, there can be fees or interest charges for doing this sort of transfer even onto an interest free card, so it is worth checking this out and making sure that it really is worth doing.

So although some people are against using credit cards, there are actually many good reasons for using them and ways that you can use them to manage money and even make money. You do need to be careful though.

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