HOW MINDFULLY USING CREDIT CARDS CAN HELP YOU MAKE MORE MONEY
Bank Cards have transformed the financial landscape over the last decade. They have renovated the concept of exchanging funds such that you don’t need to fill your wallet with liquid cash while going shopping. These plastic or metallic cards issued by a financial institution allow holders to perform real-time electronic transactions when paying bills, or making purchases.
There are two types of cards in the financial arena, Debit Cards, and Credit Cards. Both cards come in handy when making E-payments but the mode of billing slightly differs. Debit cards deduct funds directly from the customer’s checking account when used. While credit cards offer users a certain monetary size depending on their credit history, to pay bills and make purchases. In return, the cardholder pays back the credited amount with interest.
The interest is summed depending on the Annual Percentage Rate (APR) set by your credit card issuer, your rate of paying back the balance, and paying within the grace period offered by the issuer. Of course, failure to clear the balance within the period adds more interest. These interests accrue to a big expense when not well managed as has happened to most credit card-holders. However, what are the smart ways of using credit cards and would help you make more money?
Avoid balances.
How mindfully you use credit cards favors you for better bonuses and incentives. Paying your balance on time makes your credit history good, opening your account to rewards like free hotel stays, points, cashback, among others.
However, if your credit card carries an overdue balance and charges, you will not be in a position to benefit from such bonuses. Rather you will incur more interest and late imposed fees. In the end, you’ll have an increased expense from your initial balance to settle. Hence, it is important to settle your credit card balance in full as it paves way for bonuses that make you more money.
Use 0% Purchase APR
As I reiterated, the interest incurred by a credit cardholder depends on the set APR. Every credit card issuer offers a certain annual interest rate on its credit card. Some offer lower APRs than others in efforts to attract clients while others waive the APR to 0% for new clients.
Using a credit card with a 0% APR means you don’t pay any interest even on multiple payments. It’s possible to purchase goods, pay for a medical checkup or a vacation with 0 interest rates. Your card issuer will only charge you for the credited amount. This saves you from interest expenses meaning you can inject that money into a profitable business or save.
Have more than one Credit Card.
Swipping for payments has greatly cemented around the world. In fact, 70% of United States citizens use credit cards. And 34% of these people have more than 3 other cards. They could or not have a fundamental reason for having more than one card. But to burst the bubble for free is that having more than one card comes with some key financial benefits.
Multiple cards give you the chance to switch balances from one card to another reducing interests. As I said, the APR varies from one card to another depending on the terms set by the card issuer. If you have a card-carrying a huge balance with a high interest rate, you can transfer the balance to another card with a lower interest rate. Perhaps to a card with a 0% interest rate. This will halt the balance from accumulating and settle with no interest.
Having more cards also prevents you from facing a huge balance to pay as opposed to when using one card. If you use the cards interchangeably, you may have very little balance to pay for each card. For example, if you use a card to pay for vacation this summer, use a different card on the next vacation. The interest rates depend on the money used. Hence using one card twice for huge payments will stretch the interest rates.
Capitalize on Credit Card rewards
Your credit card issuer offers rewards depending on your card usage. Most of these rewards are attributed to how you frequently use your credit card to pay expenses. They can be in the form of cashback earned at a certain rate per year or points that can be redeemed to cash.
Some purchases earn more rewards or points than others and capitalizing on them will obviously boost your cash earnings. For example, suppose the reward rate is 2% per month and you spend $5,000 that month. This will translate to $1200 cashback per year meaning targeting credit rewards can help you make more money.
Spend on Sign-Up Bonuses
There are plenty of bonuses offered by credit card issuers. The type or quality of the bonus contributes to the number of cardholders acquiring a specific card. Some of the bonuses include free hotel stays, sometimes free vacations, cashback, points, among others.
If a vacation would have cost you around $5,000,000 and a certain credit card is offering it for free as a bonus, it’s realistic to sign-up for that credit card to spend on that bonus. This will curb you from spending your 5K dollars on the vacation. In general, Credit Card bonuses help you spare your money or make more from cashback and redeeming points.
Conclusion
Bank Cards have made payment transactions efficient with most people leaning towards credit cards. About 70% of the US natives use credit cards for paying bills and purchases. However, as much as the cards have revolutionized the payment field, they could pose a few drawbacks such as interests and fees depending on how mindfully you use them. If you are smart when using them, the expenses can be outstripped and you would make more money.
