CREDIT CARDS ARE MORE THAN JUST A BACK-UP PLAN!
There’s no doubt you need to be careful with credit cards. There are people of all ages throughout Canada struggling with credit card debt in the thousands or tens of thousands. And if you start missing payments, your credit score will be in danger, which will affect your ability to acquire assets and may even limit your employment options.
However, credit cards are not inherently bad. Money mismanagement is, and the two don’t necessarily go hand in hand. If you are conscientious about how you use your money, you can actually save money by taking advantage of credit cards.
Some of the better ones, even come with $0 bank fees and actual cash-back when you use them enough. Instead of battling to pay installments, you can live the lifestyle you choose without letting the debt ever get out of hand.
There are multiple ways to save money using a credit card. These are 5 of the most effective.
1. Transfer your balance to a 0% APR credit card
If you are already carrying credit card debt, there is a simple way to get out of paying crippling interest. Many credit card companies offer a 0% annual percentage rate (APR), and they’re willing to take on your balance. If you can pay off your balance during those 12 months, you will potentially save hundreds of dollars.
2. Take interest free loans for big purchases
In an ideal world, we’d only buy things once we had the money saved up. However, life happens, and often you’ll find yourself in need of an unexpected outlay. Say, for example, that your refrigerator breaks and is irreparable. It’s the sort of expense that cannot wait.
Well, with credit card companies offering 0% APRs (Annual Percentage Rate) for the first year – not just on transferred balances – you can essentially take a no interest loan.
We actually have the Canadian Tire MasterCard and have for many years because it simply gives us the rewards that we are looking for as homeowners do plenty of renovations.
3. Get a cash back card and save
Those who are financially conscientious and diligent about paying off their debt every month can benefit hugely from a cash back card. There are options that give you a flat rate on all purchases, as long as you use your credit card. If you’re paying up that card monthly, you’ll receive the cash back benefits without their being offset by interest. Of course, if you’re in credit card debt, the rewards are not going to be worth it.
4. Get travel rewards
One system of rewards that has been around for ages is the accumulation of travel miles. If you’re an avid traveler, these miles will help you get around the world. Not only do travel rewards cards give you free miles, but many also let you use points for hotels and rentals.
5. Sign-up bonuses
Finally, something you should take into account when looking for a credit card provider is whether they offer signup bonuses. These range from cash back to hotel stays and even air miles. They will come with conditions – for example, that you use a certain percentage of your available credit. If you’re able to navigate the system so that you meet the requirements while paying up your car.
Discussion Question: What are some of your favourite credit cards and why?
Share your comments below.
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