I bet no one would say that they use credit cards for saving money. In fact, if someone asks what is the first thing that comes to mind when you think of credit cards, you would probably say interest rates, penalties, fines, and fees. There is hardly any person who would consider credit cards as a money-saving tool. But there are a few ways plastics can help you save dollars. Some of them are little-known, but financial experts take full advantage of them every year.
7 Ways credit cards can help you save dollars
Do you want to know how credit cards can help to save money? If so, then have a look at the below-given section.
1. Sign-up bonus: One of the reasons why people apply for so many credit cards in the holiday season is because of the sign-up bonus. The sign-up bonus can be anything. It can be cashback, free hotel stays, free flights or any other benefit. All you need to do is spend a specific amount on the credit card within the first few months of getting it. If you can fulfill this criterion, the bonus is yours.
2. Cashback: There are several cash back credit cards that return 1-5 percent of your purchases. It’s a great bonus for cardholders. The best deals are the ones where you get 5 percent cashback in various categories like restaurants, gas, and groceries throughout the year.
You can get up to 20 percent cashback if you shop through the online Discover, Walmart, Home Depot, and Target store. That’s even a better deal.
3. Zero percent introductory rate card: It’s a myth that all credit cards have very high-interest rates. There are zero percent interest introductory rates on many credit cards. You can use them as a convenient option when you’re in credit card debt.
Balance transfer credit cards charge zero percent interest on your purchases for the first 21 months. This means you don’t have to pay any interest as long as you pay off the outstanding balance before the introductory period ends.
Suppose you’re paying 22% interest on a credit card and owe $7500 in total. You can transfer $7500 to a card with a 0% interest rate. This means you don’t have to pay a 22% interest rate anymore. This is your total savings. Just pay off the outstanding balance within 21 months and you’ll be debt-free.
Some credit card companies allow you to transfer auto loan balances, student loans, mortgage, and small business loans to a credit card. This is even a piece of better news.
4. Price adjustments: This is one of the least-known benefits of credit cards. Some stores refund the difference when your purchase goes on sale after you buy it. This means if you have purchased a product at $25 and it goes on sale after 15 days, then you may get a refund. If the same product is sold at $20, then the store may refund you $5. Some credit cards refund the difference up to $500 if you find a lower price within 60 days or 90 days. Discover and MasterCard gives this kind of offer.
If you want to get a refund from the credit card issuer, then just do one thing. Submit your claim with an ad proving the better deal within the specified time.
5. Car rental insurance: Usually, you have to shed between $20 and $29 for car rental insurance policies. This means you have to pay a minimum of $140 for a week. However, if you book with a credit card, you may not have to spend a penny on the coverage.
Several credit cards offer insurance against rental car theft or damage. Though coverage usually doesn’t cover personal injury, liability, American Express cards give a paid insurance option. If you opt for the premium rental protection, then you’ll get the coverage for rental car damage. This includes coverage for death or personal injury.
Next time you rent a car, decline the rental coverage offered by the car rental agency. Use your credit card to pay for your rental. But there are a few credit cards that waive the foreign transaction fee on international financial transactions.
6. Purchase via online discount mall: This helps you save money on flowers, dining, and movie tickets. Just do a little bit of planning ahead, find out which retailers offer discounts, and then make a purchase.
7. Save money on other loans: Credit cards have a direct connection with your credit score. Positive activities on your open credit accounts help to increase your credit score. Pay your credit card bills on time and maintain an ideal credit utilization ratio to increase your credit score.
A high credit score can help you obtain loans at a lower interest rate and save money. How much can a good credit score save you?
Person A’s credit score is 765.
Person’s B’s credit score is 600
Person A qualifies for a loan at 12% interest rate. Person B qualifies for the same loan at 16% interest rate. Obviously, person A has to make lower monthly payments than person B. He would save 4% interest every month.
Last but not least
Do you have to travel internationally a lot for work? If so, then you must be aware of the foreign transaction fee charged by most credit cards for purchases made in other currencies. Usually, credit card issuers charge 3% of the transaction amount. But some credit card issuers like Capital One doesn’t charge the foreign transaction fee on all its credit cards. So if you’re going to London or Paris, use a Capital One credit card for your purchases.