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7 Brilliant Credit Card Tricks To Save Your Money

7 Brilliant Credit Card Tricks To Save Your Money

Working hard to maximize your cash heading in to the summer? While you’re scrutinizing the use of every hard-earned dollar, play it smart with plastic and save money with these 7 credit card tricks.

1. Get that bonus!

Sign-up bonuses are perhaps the fastest way to earn miles, rewards points, or whatever incentive attracted you to that particular piece of plastic. You may be surprised to learn that a large number of new cardholders never complete the steps necessary to earn their bonuses. Take the time to claim what was promised to you, including filling out registrations or surveys.

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2. Think before you pay to play.

Many rewards programs require an annual fee. If you are depending on credit cards to earn airline miles or rewards other than cash back, take the time to determine how likely you are to actually use the rewards, and when. If you fly once every five years, for instance, that $100 annual fee means you’re already paying for your ticket out of pocket. Same goes for restaurants, hotels, and other points-based rewards—if you have to adapt or change your habits in order to maximize the rewards and justify the annual fee, you are less likely to actually use them. Shop around for a card with no annual fee or cash rewards instead.

3. Take the company up on that offer.

Credit card vendors often offer perks like gift cards, or short terms promotions like “5% cash back on all gas purchases in the month of October.” The trick here is that you usually have to claim them, and much like those mail-in rebates that rarely make it to the mailbox, many people don’t. Figure out how your bank advertises their offers, and monitor accordingly. A bank may, for instance, share promotions in a banner on the credit card account home screen once you log in. That’s it, no other way. So if you don’t log in regularly, you’ll miss it!

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4. Maximize your statement cycle.

US banks are required to allow you 21 days to pay off your bill after the cycle closes. This means that if you make a major purchase toward the end of a given cycle, you’re also buying yourself extra time to pay off your bill. If money is tight and you need what is essentially an interest-free loan to make a purchase, timing the buy well can mean a few extra weeks to pay it off.

5. Protect your identity.  

If you use your card to shop online, a bit of security mindfulness can go a long way toward protecting yourself. Take the time to change passwords and login information on sites you shop frequently, and avoid making them all the same. Avoid writing down passwords; if you must, keep the cheat sheet securely locked away at home, not on your desk or phone. Speaking of phones, refrain from having automatic login information to financial or shopping sites stored on yours—if it’s lost, a hacker can easily crack your phone password, if you have one, and have access to your accounts in no time. If you offer credit card information over the phone, do so in a private location, away from strangers.

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6. Demand a chargeback if appropriate.

 A “chargeback” is simply a refund of your money by the credit card company in the event that unauthorized charges are made on your card. Make sure your card offers this sort of protection and that you can get a hold of your company at any time to freeze your account if necessary. Do not hesitate to file a chargeback request if you have to—the merchant may not like it, but it’s your money you’re protecting.

7. Most importantly—pay off your card.  

Nothing puts a damper on a month’s worth of good deals and smart shopping like late fees or interest charges. Treat your card like cash. Only buy what you can afford, when you can afford it, and pay it off on time, every time.

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Want another tip?

Here is a simple one: get a credit card. Charge cards are the easiest way to build good credit history, which is going to be very important if and when you ever apply for a home loan, business loan, or similar. You don’t have to use it a lot, but use it often and pay it off regularly. Taking this article to heart, and want a reader’s sign-up bonus, too? Alright, you’ve got it—know your credit score! Soft inquiries, which mean you are checking on your own credit score, do not adversely impact your score; too many hard inquiries, made by merchants when you open up additional cards, can.

If you’re eager to maximize your rewards, check out these 7 Myths About Credit Card Rewards.

Featured photo credit: http://www.flickr.com/photos/68751915@N05/6355848263/ via Photopin

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Last Updated on September 2, 2020

How to Set Financial Goals and Actually Meet Them

How to Set Financial Goals and Actually Meet Them

Personal finances can push anyone to the point of extreme anxiety and worry. Easier said than done, planning finances is not an egg meant for everyone’s basket. That’s why most of us are often living pay check to pay check. But did anyone tell you that it is actually not a tough task to meet your financial goals?

In this article, we will explore ways to set financial goals and actually meet them with ease.

4 Steps to Setting Financial Goals

Though setting financial goals might seem to be a daunting task, if one has the will and clarity of thought, it is rather easy. Try using these steps to get you started.

1. Be Clear About the Objectives

Any goal without a clear objective is nothing more than a pipe dream, and this couldn’t be more true for financial matters.

It is often said that savings is nothing but deferred consumption. Therefore, if you are saving today, then you should be crystal clear about what it’s for. It could be anything, including your child’s education, retirement, marriage, that dream vacation, fancy car, etc.

Once the objective is clear, put a monetary value to that objective and the time frame. The important point at this step of goal setting is to list all the objectives that you foresee in the future and put a value to each.

2. Keep Goals Realistic

It’s good to be an optimistic person but being a Pollyanna is not desirable. Similarly, while it might be a good thing to keep your financial goals a bit aggressive, going beyond what you can realistically achieve will definitely hurt your chances of making meaningful progress.

It’s important that you keep your goals realistic, as it will help you stay the course and keep you motivated throughout the journey.

3. Account for Inflation

Ronald Reagan once said: “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hitman.” This quote sums up what inflation could do your financial goals.

Therefore, account for inflation[1] whenever you are putting a monetary value to a financial objective that is far into the future.

For example, if one of your financial goal is your son’s college education, which is 15 years from now, then inflation would increase the monetary burden by more than 50% if inflation is a mere 3%. Always account for this to avoid falling short of your goals.

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4. Short Term Vs Long Term

Just like every calorie is not the same, the approach to achieving every financial goal will not be the same. It’s important to bifurcate goals into short-term and long-term.

As a rule of thumb, any financial goal that is due in next 3 years should be termed as a short-term goal. Any longer duration goals are to be classified as long-term goals. This bifurcation of goals into short-term vs long-term will help in choosing the right investment instrument to achieve them.

By now, you should be ready with your list of financial goals. Now, it’s time to go all out and achieve them.

How to Achieve Your Financial Goals

Whenever we talk about chasing any financial goal, it is usually a two-step process:

  • Ensuring healthy savings
  • Making smart investments

You will need to save enough and invest those savings wisely so that they grow over a period of time to help you achieve goals.

Ensuring Healthy Savings

Self-realization is the best form of realization, and unless you decide what your current financial position is, you aren’t heading anywhere.

This is the focal point from where you start your journey of achieving financial goals.

1. Track Expenses

The first and the foremost thing to be done is to track your spending. Use any of the expense tracking mobile apps to record your expenses. Once you start doing it diligently, you will be surprised by how small expenses add up to a sizable amount.

Also categorize those expenses into different buckets so that you know which bucket is eating most of your pay check. This record keeping will pave the way for cutting down on un-wanted expenses and pumping up your savings rate.

If you’re not sure where to start when tracking expenses, this article may be able to help.

2. Pay Yourself First

Generally, savings come after all the expenses have been taken care of. This is a classic mistake when setting financial goals. We pay ourselves last!

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Ideally, this should be planned upside down. We should be paying ourselves first and then to the world, i.e. we should be taking out the planned saving amount first and manage all the expenses from the rest.

The best way to actually implement this is to put the savings on automatic mode, i.e. money flowing automatically into different financial instruments (mutual funds, retirement accounts, etc) every month.

Taking the automatic route will help release some control and compel us to manage what’s left, increasing the savings rate.

3. Make a Plan and Vow to Stick With It

Learning to create a budget is the best way to get around the uncertainty that financial plans always pose. Decide in advance how spending has to be organized

Nowadays, several money management apps can help you do this automatically.

At first, you may not be able to stick to your plans completely, but don’t let that become a reason why you stop budgeting entirely.

Make use of technology solutions you like. Explore options and alternatives that let you make use of the available wallet options, and choose the one that suits you the most. In time, you will get accustomed to making use of these solutions.

You will find that they make it simpler for you to follow your plan, which would have been difficult otherwise.

4. Make Savings a Habit and Not a Goal

In the book Nudge, authors Richard Thaler and Cass Sunstein advocate that, in order to achieve any goal, it should be broken down into habits since habits are more intuitive for people to adapt to.

Make savings a habit rather than a goal. While it might seem to be counterintuitive to many, there are some deft ways of doing it. For example:

  • Always eat out (if at all) during weekdays rather than weekends. Weekends are more expensive.
  • If you are a travel buff, try to travel during off-season. You’ll spend significantly less.
  • If you go shopping, always look out for coupons and see where can you get the best deal.

The key point is to imbibe the action that results in savings rather than on the savings itself, which is the outcome. Focusing on the outcome will bring out the feeling of sacrifice, which will be harder to sustain over a period of time.

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5. Talk About It

Sticking to the saving schedule (to achieve financial goals) is not an easy journey. There will be many distractions from those who are not aligned with your mission.

Therefore, in order to stay the course, surround yourself with people who are also on the same bandwagon. Daily discussions with them will keep you motivated to move forward.

6. Maintain a Journal

For some people, writing helps a great deal in making sure that they achieve what they plan.

If you are one of them, maintain a proper journal, where you write down your goals and also jot down the extent to which you managed to meet them. This will help you in reviewing how far you have come and which goals you have met.

When you have a written commitment on paper, you are going to feel more energized to follow the plan and stick to it. Moreover, it is going to be a lot easier for you to track your progress.

Making Smart Investments

Savings by themselves don’t take anyone too far. However, savings, when invested wisely, can do wonders.

1. Consult a Financial Advisor

Investment doesn’t come naturally to most of us, so it’s wise to consult a financial advisor.

Talk to him/her about your financial goals and savings, and then seek advice for the best investment instruments to achieve your goals.

2. Choose Your Investment Instrument Wisely

Though your financial advisor will suggest the best investment instruments, it doesn’t hurt to know a bit about the common ones, like a savings account, Roth IRA, and others.

Just like “no one is born a criminal,” no investment instrument is bad or good. It is the application of that instrument that makes all the difference[2].

As a general rule, for all your short-term financial goals, choose an investment instrument that has debt nature, for example fixed deposits, debt mutual funds, etc. The reason for going for debt instruments is that chances of capital loss is less compared to equity instruments.

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3. Compounding Is the Eighth Wonder

Einstein once remarked about compounding:

“Compound interest is the eighth wonder of the world. He who understands it, earns it… He who doesn’t… Pays it.”

Use compound interest when setting financial goals

    Make friends with this wonder kid. The sooner you become friends with it, the quicker you will reach closer to your financial goals.

    Start saving early so that time is on your side to help you bear the fruits of compounding.

    4. Measure, Measure, Measure

    All of us do good when it comes to earning more per month but fail miserably when it comes to measuring the investments and taking stock of how our investments are doing.

    If we don’t measure progress at the right times, we are shooting in the dark. We won’t know if our saving rate is appropriate or not, whether the financial advisor is doing a decent job, or whether we are moving closer to our target.

    Measure everything. If you can’t measure it all yourself, ask your financial advisor to do it for you. But do it!

    The Bottom Line

    Managing your extra money to achieve your short and long-term financial goals

    and live a debt-free life is doable for anyone who is willing to put in the time and effort. Use the tips above to get you started on your path to setting financial goals.

    More Tips on Financial Goals

    Featured photo credit: Micheile Henderson via unsplash.com

    Reference

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