Thinking Money | Free Financial Advice and Tips

What Kind of Credit Card Will Help Save Money?

Posted on 03. May, 2009 in Credit cards

Many people already know that credit cards can be very convenient. This convenience often ends, however, because many people do not use a credit card correctly, or allow themselves to get into credit card debt. Here are some tips about how to save money with a credit card and use them to your advantage.

Choose a Credit Card Based On Your Expenses

Saving money with credit cards is possible, but only with the right usage of it. Many people are deceived into thinking that having a credit card is saving them money – no matter how they use it. It just won’t happen.

There are many kinds of credit cards available and many of them target a particular type of expense. Some focus on airfares, some on cars, or gas. You want to start your search for the right credit card by looking at the area where you have the most monthly expenses.

Get One That Rewards You for Your Largest Monthly Expenses

This type of credit card will also enable you to save money because they usually give you the largest amount of rebate on that type of purchase. Although many of them give a rebate, or cash back, on most of your purchases, some credit card companies will give up to 5% back on certain purchases.

Obviously, if you can get 5% back – rather than 1% – on your most purchased item each month, then this also means that it will also give you the largest rebate possible. This will provide you with a larger savings than other uses.

Go for the Lowest Interest Rate Possible

Besides the type of credit card, though, you will also want to consider the interest rate on the card, too. Even with a 0% Introductory Offer, you want to remember that the interest rate will kick in sooner or later. That is the interest rate that you will be paying when it does.

The best way to use any credit card and save the most money is to simply pay off the entire amount owed before it is due. This way you pay absolutely no interest, no late fees – and this method allows you to save money. Make sure that the credit card also has no annual fees, too. Also, be sure to remember that things like only one late payment can instantly cause you to get put into a very high interest rate – of more than 29%!

Select Balance Transfer Credit Cards If You Have Debt

If you already have some credit card debt, then you will want to get a credit card that also has a balance transfer feature on it. This allows you to transfer current balances to the new credit card and pay 0% interest for up to one year. This would help you save a ton of money during that year, and will give you time to reduce that credit card debt considerably.

Saving money on a credit card really is not complex. All it takes is getting the right one in the first place, and then using it wisely afterwards. If you already have credit card debt, do not put any more purchases on it until the debt is fully paid.

Tags: Credit Card, save money