If you’re like many of us, you’ve been led to believe that the surest way to financial freedom is to cut up those evil little pieces of plastic, throw them away and never, ever, ever buy anything except with cash.
For many– especially those getting out of credit card debt– it’s a system that works. But for the rest, the benefits of using credit cards are still many, like convenience, rewards, and savings. Here are ten smart ways to use your credit cards and come out on top.
1. Pay off the balance in full and on time each month.
This is the one rule without which all the rest don’t matter. Pay everything on the line that says ‘balance due’ on or before the due date. The objective is not to have anything the credit-card issuer can charge you fees, penalties and interest on.
2. Rewards, points and rebates.
Being strategic and taking advantage of rewards can help you save with free dinners, appliances, flights and more. In fact, you can often get cashback rewards along with points in some establishments. For example, gas stations offer 5% rebates if you pay with specific credit cards.
With hour sales and bargain flights, it definitely makes sense to use your credit cards. They’re more convenient than running to the payment center and you get to catch the bargain flights.
The bigger advantage however, is that if something goes wrong with the airline or the trip, you have better chances of getting your money back. Many card issuers also offer free travel insurance and car rental insurance, so that’s an added bonus.
4. Internet shopping.
Sure, many online stores like eBay and Amazon take debit cards, but they aren’t quite as universal as credit cards. Then there’s the added security of knowing that if you never receive what you ordered (or it’s damaged or not quite as promised) a simple call to the card company can fix that.
5. Appliances and other big-ticket items.
Zero-interest installment plans free up your cash for short-term investments and savings. Of course, it still pays to shop around and if you can get it substantially less elsewhere using cash, but many credit cards offer extended warranties on certain items, which can save you money in the long run.
As of this writing, Meralco and Smart offer cash rewards for early payments. What’s more, those amounts add to your points.
7. Tracking Expenditures.
If you have a hard time with making a list of expenses, take a look at your bill and see what you’ve spent your hard-earned money on this month. If it’s a column filled with expensive dinners or shoes, you know what you should be cutting down on, right?
8. Take advantage of the grace period credit cards offer.
With cash and debit cards, money is automatically gone when you buy something. A credit card lets your money stay in your account longer, and work for you. This extra time can be useful if you leave your money in higher-interest earning accounts.
9. Don’t use the cash advance facility except in case of extreme emergencies.
Withdrawing cash from your credit card balance is a bad idea. Unlike credit card purchases, cash advances usually have an automatic fee attached on top of interest. So unless it’s a matter of life and death– don’t.
10. Don’t have too many credit cards.
Stick to two or three credit cards at the most. If you find a better credit card that offers lower interest rates and lower to no memberships fees, it might be a good idea to trade up. Take note however, that it’s a trade– meaning your give up your older, higher interest-charging card– not an addition.
Credit cards are like cars. Use them wisely and they can help get you faster on that road to financial freedom. So charge on!