I try to use credit cards for all of my purchases unless the store only accepted cash. I know what you’re thinking. I either have a massive amount of debt or be a chronic over-spender.
The critical thing to remember is to limit your spending to what you can pay in full with your next credit card bill. And this assumes you’re not carrying a balance month-over-month, accruing interest fees.
7 simple ideas to save money with credit cards
Let’s walk through my seven favorite way to save money using credit cards. They fit nicely into everyday usage too.
Use cash back credit cards
Cash back credit cards give you a discount on the money you’re spending, especially with everyday bills and expenses.
Before signing up your auto-charge expenses, double check there are no extra fees for paying by credit card. Those extra fees will always exceed the cash back bonus.
Sign up for new credit cards based on the bonuses
New credit cards can be a great way to score more cash back or rewards points, but don’t signup for every card you see.
You might notice temporary credit score reduction when opening a new credit card because it adds an inquiry and reduces your average card age. In the longer term, you should a score boost from your increased available credit amount.
Sign up for rewards promotions
Your credit cards may have monthly or quarterly promotions. You receive extra rewards points or cash back based on the offer.
Either you may need to spend money with a specific category, above a specified limit, or shop at participating stores. These offers are easy ways to boost your rewards if you already make purchases similar to the offer.
Don’t use this as a license to spend more money than you need to.
Use 0% cards for big purchases
This is one of my favorite savings hacks. Let’s say you need to make a big purchase, having time to pay it off without accruing interest is a great way to save money.
And even if you have the cash available to pay for the large purchase, using a 0% credit card may still be worth it. You can continue to earn interest on your cash while paying off the balance over time.
Important tip: make sure you pay off the balance before the promotion period ends otherwise you’ll be hit with a nasty interest charge.
Use rewards programs for free promotions and perks
Choose your credit cards based on the types of rewards programs that fit your life. For example, if you like to travel, rewards programs focused on hotels and airlines may give you free stays, flights, or other perks that will save you money.
Even if you don’t travel often, these are also interesting to research speciality cards before taking a big vacation. Strategic use of credit cards can save you money on an expensive trip, especially if there are new card sign-up bonuses involved.
Redeem your rewards points for gift cards
Do the math on your reward options. Sometimes gift cards are a better deal than cash back, especially if one of your favorite stores is available as a gift card.
I’ve also seen credit cards offer redemption promotions, where you get more gift card money for your points.
Tip: You could also redeem your rewards points for gift cards to use as presents. Save money on gift giving by using your credit card points.
Stack deals with retailer discount promotions
For your favorite stores, it almost always works about better to have their specialty card in addition to the regular credit cards. They offer a higher reward rate when you pay using their credit card.
The added rewards points is a marketing tactic to get you to come back and spend more money. If you’re strategic and mindful about what you’re spending, you can work this to your advantage.
I also like to combine this with Ebates (now Rakuten) to double dip on additional cash back promotion in addition to using their credit card for a higher cash back rate.
Tip: Make sure you only spend what you can afford to pay in full. The interest rates on speciality cards are typically higher than traditional cards.
Check for a discount mall and retailer promotions
For traditional credit cards, they may also run rewards promotions where receive additional points for spending money at a specific store. Or you may be able to click through a discount mall to earn extra points (or discounts.
If your credit card doesn’t offer these types of promotions, also check out Ebates (now Rakuten) as it’s a similar program, but you can use either your regular credit card or theirs.
Additional ways to save money with credit cards
As with all rewards and promotions, it’s only valuable to you if matches how you spend your money. Check the credit card fine print to see if any of the following applies. You may be able to save money without having to purchase additional coverage such as:
- Extended warranties on purchases
- Car rental insurance coverage through your credit card
- Price protection services
Credit cards that don’t charge foreign transaction fees
The occasional fee is annoying. If you frequently purchase from sites outside of the country, a card that doesn’t charge foreign transition fees will help save you money.
Consolidate credit card balances into a 0% card
And finally if you’re currently carrying credit card balances, consolidating your credit cards into a 0% card may be useful. Before you consolidate cards, double check the terms for combining (there’s usually a transaction fee).
And if you don’t pay off the credit card within the promotion period, the interest charge will likely be high. Know your strategy and have a plan before getting into this one.
A few additional hacks for saving money with credit cards
As I mentioned earlier, I use my credit cards to pay for almost all of my purchases. You need to know which rewards program work best for you. If you like to travel, a travel rewards card may be more valuable than a cash back card.
For me, I want to use a few different cash back cards, that I use based on the type of purchase I’m making.
When I’m buying from Amazon, their card is the best option. For the grocery store, I have a card that offers 6% cash back (up to a max for the that I generally don’t reach). All other purchases go on credit card that offers 2% cash back as long as I transfer the reward to my brokerage house first.
For regular bills that allow me to auto pay using a credit card without an additional fee, I sign up for those.
To ensure I pay my credit cards on time I pay the minimum amount immediately when the statement issues and then spend the remaining balance the day before it’s due.
To make sure I can do this, I use the half payment budget method where each paycheck I save about half of the statement balance into a separate account that I transfer into my checking account to pay the bill.
If it sounds like too many hoops, it’s something you can get used to and turn into muscle memory over time. I try to not have that many active credit cards at the same time to keep this from being too crazy. I have my regular spending.
Over to you, how do you save money with credit cards
There’s many strategies that you can use to save money when using credit cards as long as you shop smart. Cash back cards worn’t help if you carry a balance month-to-month, spending more than you can pay back. What other tips have worked for you?
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