Much has been made of the dangers of credit cards, and for many people those dangers are all too real. With interest rates hovering around 18% even in a low interest rate environment, even a small balance could take years to pay off.
Even so, the fears about credit cards are somewhat overblown, and the responsible use of plastic can lead to financial gain instead of loss. If you are willing to be responsible and put in the work, you can beat the credit card companies at their own game, and here is how to get started.
Banish Your Balances with 0% Transfer Offers
How much faster could you pay off your existing credit card debt if your interest rate suddenly dropped to zero? If you are paying 18% or more on your balances, check the mailbox for 0% APR transfer offers and pay off what you owe that much faster.
You may need to jump through a few hoops to qualify for these offers, and you will need to keep careful track of deadlines to avoid spiking interest rates, but if you are willing to put in the work, you could save a ton of money. And once you are debt free, you can continue to beat the credit card companies at their own game.
Rack Up the Points with New Cardholder Bonuses
The credit card industry is a hugely profitable one, so much so that banks are willing to pay handsomely for new customers. If you are willing to add another piece of plastic to your wallet, you could enjoy hundreds of dollars in free flights, free gift cards and even cold hard cash.
The number of offers can be simply overwhelming, so the hardest part could be sorting them out. Think about the rewards you value most, be they airline miles for free flights, gift cards for spending and giving, or cash for your wallet, then choose your cards based on those criteria.
Control Your Spending with Purchase Alerts
Credit card issues hope you will overspend–that is how they make the bulk of their money–but you can beat them at their own game by signing up for purchase alerts. These text alerts or emails can help you track your spending, so you can put the card away when you reach the outer limits of your budget.
This simple technique can also help you build a better and more effective budget. If you are new to budgeting, you can track each purchase, looking for excessive spending patterns and other issues that could cause you financial harm.
Use Credit Cards to Beef Up Your Credit Score
If you are in the market for a mortgage or shopping for a new car, every point you add to your credit score could mean more money in your pocket. The higher your credit score, the lower your interest rate could be, and credit cards can play a big role in boosting it.
Every time you pull out that plastic and sign your name, you have a chance to increase your credit score. Simply paying your bills on time will beef up your credit score, so you can save money on other loans without paying a penny in interest to the credit card companies.
It is easy to view credit cards as a trap, and for some people they can be. But for others credit card use is a golden opportunity, one that they can use to increase their credit scores, control their spending and even score some free cash in the process. The techniques listed above can help you beat the credit card companies at their own game, so you can enjoy the convenience of plastic without the cost.