Credit Cards: The Secret To Savings

Affiliate Incentives

First of all, many credit card companies work with affiliates who provide special offers to you for using the credit card. This began with frequent flyer miles and has evolved into its own industry, spawning many programs in a variety of retail categories. No matter what you like to buy, you can probably find a program that will earn you points towards your next dream purchase. Just like with frequent flyer miles, you earn bonuses on everything you buy, so you could very easily use your credit card to buy everyday things and pay it off at the end of the month. This provides you with the unique opportunity to truly earn free things just for spending the same money that you always do.

Be careful though, because these programs are very convenient and easy to use, which makes them easy to abuse too. If you are truly trying to use the program to save money, then you need to be absolutely certain that you can afford to pay your balance at the end of the month. If you do not, then the interest can add up and you will end up paying, sometimes even more than your incentive is worth.

The Balance Transfer Balancing Act

There are programs out there that advertise as little as 0% APR on all balance transfer to their cards. These programs can be helpful to you because they give you the opportunity to pay down your balances faster, since there is no interest accruing. However, you need to be wary of the limitations on the interest rate, since it is likely variable and will adjust after the introductory period expires. Whether you are on a 6 or 12 month period will determine how you should make your payments. If you follow your plan, you can very easily get rid of those debts without ever paying any more interest.

By taking advantage of a balance transfer option, you will make it much easier on yourself to improve your credit, even if your score is already a good one. When you consolidate your credit, you reduce not only your overall interest rate, but you literally reduce the amount of accounts you have. That means only one payment per month and only one due date, and if you have any problems, it also means only one penalty. This makes it very easy to monitor your credit and formulate a budget that you can control.

The interesting thing about balance transfers is that while you are removing all of the balances on your previous cards, you should not necessarily close them. This is because your credit score is determined by how well you make payments, but also by how much available credit you have at any given time. When you use the balance transfer option, you actually improve your credit immediately because you doubled your credit limit without spending any money. This can make you appear as less of a liability and can help to improve your credit.

Give Yourself a Gift Card

Gift cards are not just a good way to send a gift through the mail or to let someone choose the kind of present they want. You can actually use them for things you want to buy for yourself, and save money in doing so.

Many gift cards are marketed at a discount. For instance, a department or specialty store might offer a $50 gift card for $40 online, which immediately saves you $10 or 20%! Buy it with your credit card and then use the card in the store just like you would have used cash. This system only works if you pay off the balance at the end of the month or the interest will compensate for your savings. If you have a good incentive program, you can benefit twice from this purchase by saving up front and also by earning rewards points.