Use Your Card to Your Advantage
We all know credit cards are dangerous, yet if used correctly, they can actually be very advantageous. There are an array of cards available that offer points, rewards, airline miles, statement credits and YES, they are all very lucrative. However, if you do not know how to use your card to your advantage, you could be digging yourself into a whirlwind of debt. It is estimated that the mean credit card debt for the average American is $5,700. (Source ValuePenguin)
With this amount so high, I’m not suggesting you use your card to go on a spending spree. (Although that would be fun!) Nonetheless, I’m offering some advice to help you build credit and earn some of the amazing rewards these plastic gems have to offer.
Let’s change that $5,700 figure around and let the cards work in our favor. If you are sick of being one of the people that pays interest on your card and gets nothing in return, keep reading…
Here are six ideas to make your credit card work for you!!
- Pay the monthly balance and build credit – Let me be clear! You should only charge what you are able to pay off monthly. In order to build credit, only charge around 25% of your spending limit. For example, if your credit limit is $1000, only charge $250 per month. Also, be sure to pay your monthly bill on time. The easiest way to damage your credit is to neglect paying your bill. Not to mention, you will be hit with lofty late fees. On the contrary, you will build credit by paying your bills in a timely manner.
- Pay your bills with credit cards to earn more points – At one time, I lived in an apartment that allowed me to pay rent with my card. The bill was automated and paid monthly. Also, I put my electric, cable and cell phone bills on the same card. This made it much easier to pay them all and keep a budget. I literally earned over a thousand points per month. This came in handy at Christmas when I needed gift cards (one reward choice) and at one point I cashed in my rewards for $300 worth of Best Buy gift cards to buy the computer I am typing on now!
- Write it down – I don’t like financial surprises and it is easy to let your credit card bill get away from you. One purchase after another adds up! Although I know I can check my credit balance at any time online, there is something about logging in and figuring out what purchases are complete or still pending that seems like more work. For me, it is easier to keep a spending journal. I use the notes on my cell phone to write everything I spend on my credit card. I can check it when I want and it is fast and easy! Sleep easy…No surprises when the monthly bill comes!
- Only use two credit cards. – One card would be even better but I use two because I love the Target REDcard. I use my major card for all other non-Target related purchases and bills; however, I can’t shop at Target without getting my 5% discount with the REDcard and free shipping on every purchase through Target.com. This is how I did my Christmas shopping last year. By only using one or two cards, your bills will be more organized and your bill due dates will be clear.
Tip: Try using Ebates when shopping on Target.com. Don’t have an Ebates account? Click the link below to receive a $10 credit.
- Rental Car Insurance – Many cards offer insurance on rental cars. Make sure you check your card’s policy. Moreover, I was in a situation where I needed to use this insurance due to hail damage on a rental car (long story but the damage happened before I rented the car); however, if I had not used my credit card to book my rental car, I would have ended up paying a $500 deductible for damages. My credit card paid my car insurance deductible. That was a mess but I was thankful I used my card.
- Purchase Protection – Many cards offer purchase protection. My card company will reimburse me if I make a purchase paid in full with the card and decide to return the item, but the store will not accept the return. I have 90 days to file a claim for a full refund. (Again, check your card policy.)
On A Final Note:
Although these tiny pieces of plastic can cause serious financial issues for some, if you have good impulse control and can stop those impulse buys your card can work in your favor. There are many advantages to using a credit card. Yet, if you are in serious credit card debt, try paying off your bill before charging more. Furthermore, use your card to stay organized, build credit, protect purchases, and earn free rewards. You will be amazed at the payoff!
Thanks so much for the visit!
Take care – Sarah
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