Cash The Checks Personal Finance Blog

6 Ways To Use Your Credit Cards To Make & Save Money

Back when I was knee-deep in credit card debt, I viewed credit cards as pure evil. Although it was all of my own doing, the debt created a massive amount of stress for me in my everyday life, and the battle to get out of the red was long and hard.

Once my last balance was paid off, I finally realized that credit cards can be your friend – and not only that, you can actually use them to generate significant revenues. However, these ideas will only work if you’re in a position to pay your bills in full and on time every month. You can use one of the best cash back credit cards, but if you’re paying 21.99% interest on your balance, then all your rewards are essentially lost.

Below are some strategies to help you use credit cards to earn and save money:

1. Pay for Everything With Credit

While the debate rages as to whether you should pay for things with credit cards or with cash, ultimately it depends on your own situation. If you currently carry credit card balances, then you should pay for items with cash to save on interest payments. If not, I would strongly suggest paying for everything that you can with a credit card. In many instances, you can sign up to have your utility bills paid for with a credit card, and in doing so, you’ll increase your rewards balance.

2. Find the Optimal Rewards Card

You can make money by using a credit card with a great rewards program; however, with all the different options at your disposal, you should do your research to find one that fully optimizes your spending choices.

For example, if you fly a lot, choose one of the best travel rewards credit cards with stellar frequent flyer miles, such as the Gold Delta Sky Miles card. If you travel by car and pay for gas on a regular basis, consider the Costco True Earnings Card from American Express. For the typical parent, I’d suggest the American Express Blue Cash Preferred card, which offers a whopping 6% cash back on groceries and 3% cash back on gas.

3. Take Advantage of Additional Perks

Although it can be time consuming, always read the fine print associated with every credit card in your possession, as they often include credit card perks that you’re not likely aware of. For instance, many cards will offer free concierge services and free insurance on rental cars when you travel, and in some cases, your credit card will double the manufacturer’s standard warranty on items that you purchase.

4. Reduce Interest With Balance Transfers

Balance transfers are a great way to reduce the amount of interest you pay each month. If you’re currently carrying a balance, consider transferring it to another card with a lower interest rate.

For instance, the Discover More card offers a 0% APR on balance transfers for the first 12 months. However, you must pay a fee of 3% of the balance transfer, so be sure to factor this into your decision before going through with the transfer. Also, after the introductory rate expires, the APR increases to 10.99% – 19.99%, based on your credit.

5. Don’t Close Your Accounts

If you have a credit card that you no longer use, don’t close the account. A portion of your credit score is determined by the amount of credit used compared to the overall amount available. Therefore, you want your available credit to be as high as possible.

Credit issuers will often close accounts if they notice extended periods of inactivity, so to avoid this, occasionally break out the card, put a few minor purchases on it, and then pay off the bill.

6. Take Advantage of Teaser Offers

Credit card sign-up bonuses are extremely common. The Citi Thank You Preferred card offers a $250 gift card after you purchase $2,000 in the first three months, and the Chase Freedom Visa gives you a $200 cash back bonus after $500 in purchases in the first three months.

Don’t go overboard, however. Although the rewards are significant, opening up too much credit in a short period can have a negative effect on your credit score.

Final Thoughts

When you use your credit card for purchases, there is one simple rule to keep in mind: If you can’t afford to pay it off by the end of the month, then you can’t afford it at all. Credit cards can help you earn money, save on purchases, and build your credit score – but only when used with proper restraint.

Also remember to never use a credit card for a cash advance, as banks often tack on an additional fee, and you’ll have a higher interest rate than with normal purchases.

What tips do you have for responsible credit card usage? What are your favorite rewards cards?

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