Looking for a new credit card? There’s a big difference between using a credit card because you’re in dire financial straits and using one to enrich your life and actually save money. These tips will show you how to get an edge when choosing a card, so you can squeeze more out of your finances.
Is Your Balance Paid off in Full?
The key to using your credit in a way that’s advantageous to you is starting with a clean slate. If you feel overwhelmed by credit debt, it’s time to stop feeling the squeeze. The best first step is to make a plan for paying it off. When a credit card is not something you need out of financial desperation, it can be used to enrich your life.
Choose Cards that Speak to You
Every day, new credit card offers pop up offering cash back and bonuses for specific types of spending. It pays to keep an eye open for promotions and offers that will put money back in your pocket through cash back or bonus deals. For example, if you’re always on the move or drive a long commute to work every day, look for a card that offers the most cash back on gas. If you buy groceries twice a week for a large family, find the card that offers the best cash back at the stores or big box clubs you shop at.
Even if you don’t have specific spending habits, some cards offer
The Art of the Balance Transfer
Your debt is valuable to credit card companies that want to charge interest on your account. For this reason, banks and card issuers, such as Visa, MasterCard, and Discover, continuously offer balance transfer offers that allow you to pay your existing debt off with a new or existing card.
The offer is this: In exchange for transferring your balance to a different credit card, you pay a low (as low as 0%) interest rate for a fixed time—as long as two years. If you go beyond the fixed time limit without paying off the full amount, you begin to accrue interest on the remaining debt at a more typical card interest rate ranging from 16 to 29 percent.
The bank or card issuer charges a fee for a balance transfer, 3-5 percent or more. So, if 3 to 5 percent of your balance is less than what you expect to pay on your current debt at your current interest rate, and you have a plan to pay the balance, a balance transfer could save you a lot of money over the full time of the offer.