How to save money on credit cards

Posted bySophie Knight | Category Blog | Date 04 October 2017

Using a credit card has its own wide range of benefits, especially if you are very careful with how you use your credit card. But what if there were further ways to use your credit card to save money? Well there are! We’d like to share with you, here on Guarantor Loan Comparison, some money saving strategies to do with the use of your credit card and getting the most out of it.


Consolidate your credit card debt with caution

Many credit card users use a common strategy that used to aim to trim what they owe on their credit cards each bill date. The users use balance transfer credit cards. They use ones that offer 0% or low APR on the balance that can be moved over, but for a limited introductory period.

If you do this, it is important to complete a cost benefit analysis before going through with this plan since the majority of cards nowadays have a balance transfer fee (typically rated at around 3% of your debt) that you’ll need to pay out when you execute the switch.

You should also evaluate very closely whether you will be able to pay off your debt entirely before the promotional 0% rate period is over. This is in order to evade any increases in the price of the card rate. If this is not realistic for you and you believe it will not work, it might be worth doing a balance transfer still. Only if new card carries a much lower APR than your old one, you should still consider it. If not, it may not be worth it.

Only use rewards credit card if you can (definitely) pay it off in full

 Many of us are he fans of the thought credit card rewards. However, it is important to be aware that the offset of rewards that they pay out, may be given on cards that tend to have a higher interest rate than regular credit cards.

It only makes obtaining a rewards credit card worthwhile if you intend to pay the balance off in full every single month, without fail. If you cannot commit to this, it is best to go for a credit card with a lower rating.

Pay more than the minimum and pay on time

 You will find that simply practicing good habits like paying on time and paying more than the minimum, you will avoid large financial charges and penalties that may be levied upon the account.

It is always best to pay off your monthly balance in full, but if you find that there are times when this is not possible, paying more than the minimum requirement should save you quite a bit in interest over the long-term. It is the case that there are certain type of credit cards that actually reward this kind of behaviour, so make sure you do pay more than the minimum if you cannot pay the bill off in full.

Do a lot of research before applying for your credit card

Like with most things, it is important it important to do your research in order to be able to compare and contrast all the options of what is on the market and what works best for you.

Compare the offers credit card providers offer before you sign up for anything. Make sure to read the terms carefully. Based on the habits of your spending, you should find a card that works with the way you spend and you spending patterns. Some are better than others for certain things, such as lifestyle.

Do not own too many credit cards

Owning too many credit cards may actually prevent you from optimising your rewards on any of the one of the cards you own. It is also true that having too many cards encourages you to charge more than you may be able to pay off at the end of the month, and overuse your credit. No one wants bad credit ratings.

Try not to rely on your credit card for emergency funds

It is actually all too common for people to not have savings for the purpose of emergency funds and end up heavily relying on their credit cards to bail them out whenever something comes up.

This may seem perfectly fine to you, but the reality of the matter is that, with no savings you are more likely going to keep a balance on the credit card as soon as it is used for the purposes of bailing you out. Keeping this balance means you will be forking out more extra interest.

Yes, keep you card as a backup and use it if absolutely necessary, but consider using savings first, rather than promptly reaching for your credit card – this can be far more expensive in the long run.

 Have a spare credit card

You may wish to consider applying for a second credit card.  This should be of the low interest kind, this is the card that you can afford to own with a balance given its lower rates while having a card with higher interest ratings and better rewards as your main card.

This way you can still take advantage of the rewards on a rewards card, but only use it for items that you will only be able to pay back each month. This would be your second card.

Talk to your credit card provider about lowering the rate on your card

If you have good credit ratings and a good history as a card holder with the credit card provider, you may be able to see some perks coming your way. If you have been a customer for a while, the company which provides your card would not be hesitate to discuss with you about the possibilities of cutting you a break on the rates that you have been paying. Give them a call or go into your local bank, you are in a better position if you have a history of good credit ratings.