Advertising
Advertising

5 Credit Card Habits That Will Have Your Credit Cards Printing Money, Instead of Burning It

5 Credit Card Habits That Will Have Your Credit Cards Printing Money, Instead of Burning It

Credit cards can do one of two things. They can earn you tons of value through rewards, points, miles, cash and perks. Or, they can burn a hole through your wallet with fees, penalties and sky high interest rates.

Here are 5 habits that will turn your credit cards into money earning power houses.

1. Free Loans

Did you know there are two ways you can get a bank to lend you money for free? A credit card’s grace period essentially lends you money with no interest from the time you make a purchase to 21 days after you receive your credit card statement. That’s free float that can bridge a short term cash flow issue or allow you to earn interest (although not much nowadays) on the banks dime.

Advertising

Another way to squeeze free money out of a bank is through 0% balance transfer credit cards, cash advances and purchase rate promotional periods. Many credit cards offer 0% promotional rate for limited time periods. Take advantage and you can either transfer high interest debt to 0%, or borrow money for a new purchase completely free for 6-12 months and more sometimes.

2. The Golden Rule

Missing credit card payments can jack your rate, trigger late fees and destroy your credit score. The challenge is, no matter how good our intentions are, many of us get distracted and fail to make our payments on time.

There is a fail-safe way to never be late on a credit card payment again. By scheduling automatic monthly payments to your credit card, you’ll have the choice to pay down your entire balance or your minimum monthly payment by the statement due date. You’ll literally never be late again.

Advertising

3. Every Dollar Counts

If you’re going to make a purchase you might as well get rewarded for it. Why use cash or debit cards when you get nothing in return. Credit cards are a great way to manufacture significant savings on everyday purchases like gas, grocery, restaurant and pharmacy spend.

Many of the best cash back credit cards now offer opportunities to earn 5% in cash rebates in selected merchant categories. In fact, you can even combine multiple cash back credit cards with bonuses in different categories to maximize your earnings on all your spend.

Whether you’re buying a pack of gum, jeans or booking a cruise, get rewarded for every cent you spend. Not only will you maximize your rewards, you’ll also get the added budgetary benefit of seeing exactly how much you spend and where on your credit card statement.

Advertising

4. Welcome the Bonus

Yes, earning rewards from your credit card spend is valuable. But credit card issuers give away the most value in their sign-up bonuses to lure new customers. Think about it! Do you want to spend $50,000 to earn 50,000 points, or simply get a new credit card and earn the 50,000 points? Why do you wait 2-3 years for a free trip when you can get it right away?

The lesson is, loyalty doesn’t pay. Too many people stick to the same credit card year after year. Instead you should get a few new cards with significant welcome bonuses each and every year and watch your rewards multiply exponentially – rinse, wash, repeat. When doing so, just make sure to take note of the credit criteria, minimum income and minimum spend required to get approved for the card and receive the bonus.

5. Get Perky

Not only can credit card perks add comfort and luxury to your travels, they can also save you real dollars.

Advertising

Look for cards that offer perks with real cash value, such as free bags at check-in ($25-$35 in savings per bag), free roadside assistance ($65 value per year), free annual companion ticket ($250+ per year), complimentary travel insurance ($400+ per year), free wi-fi ($10 per day), free lounge access ($40 per visit) and free extended warranty coverage ($100+ per year).

Conclusion

Credit cards do have a dark side. But used properly, as they are by millions of people, they can bring lots of value to your pocket. Instead of running scared, embrace the positive, limit the negative and watch your credit card rewards bank bulge with points, miles and cash to spare.

Featured photo credit: Kaiyan / Flickr via flickr.com

More by this author

Marc Felgar

Marc Felgar is an aging, health & senior care expert focused on improving the lives of mature adults.

7 Natural Memory Boosters That Actually Work for All Ages The Best Way to Sleep to Relieve the 7 Most Common Ailments How to Help Nausea Go Away Fast with These 5 Fixes The Common Causes of Sleep Problems (And How to Fix Them Fast) Getting Fit Over 40: The 7 Best Workout Routines for Beginners

Trending in Money

1 How to Use Credit Cards While Staying Out of Debt 2 How to Use Debt Snowball to Get out from a Financial Avalanche 3 How Personal Finance Software Helps You Get More Out of Your Money 4 The Best Ways to Save Money Even Impulsive Spenders Can Get Behind 5 How to Answer the Tough Question: What are Your Salary Requirements?

Read Next

Advertising
Advertising
Advertising

Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

Advertising

Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

Advertising

I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

Advertising

Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

Advertising

So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

Read Next