Credit cards are a great asset. They grant spending power and often come with valuable benefits like fraud protection and coverage for damage to rental cars. Though, credit cards can be a great liability. Over-spending on credit cards can quickly add up to unmanageable debt.
Use your credit cards wisely and follow these 4 savvy credit card strategies for smart spending!
- Rack up rewards points.
Reward points can be used for travel, gift cards, bill payment credits, or cash. The reward point program and how it operates is specific to each credit card. When you’re selecting a credit card, choose the one with the most favorable lending terms and best reward point program. Generally you should not have to pay an annual fee for a credit card. However, consider what reward benefits are available, as it may outweigh having to pay a small annual fee. Also, be aware of reward program limitations such as minimum purchase requirements or caps on the amount of rewards you can earn.
- Time large purchases wisely.
If you time the purchase of a large item (like a vacation package or new computer) right you can avoid paying for the item or interest on the charge for nearly two months. How does this work? If you make a large purchase right after your new billing cycle begins that charge will not appear until next month’s bill. By the time next month’s bill is due, so long as you pay it in full, you basically are able to make a large purchase interest free for nearly two months.
Note that this strategy does not work if you are carrying a balance on your credit card and that card uses the average daily balance to calculate interest charges.
- Save on your car rental.
When you rent a car the salespeople often attempts to up-sell you on a number of items like navigation, a car upgrade, and even insurance coverage. While you may want navigation or a fancier vehicle, your credit card may offer you some car rental protections and benefits so that you can decline the car rental agency’s insurance coverage.
Many credit cards offer certain car rental benefits like coverage for damage, theft, or fire. For example, many MasterCard’s include “MasterRental Coverage” which when applicable will cover repair amounts for physical damage to the vehicle, deductibles, theft coverage, and towing expenses to the nearest collision repair facility. It is important to contact your credit card company and ask what car rental benefits, if any, it offers. Relying on the credit card benefits may give you the peace of mind to deny additional insurance coverage sold by the car rental agency, saving you $15/day or more on the rental.
- Safer shopping with a credit card.
Credit card purchase have certain protections under the federal Fair Credit Billing Act. Under the Act you have the right to dispute a charge you made on your credit card if the merchandize is not delivered, is not delivered as agreed, or is not delivered as promised. For example, you can dispute a charge for merchandize when the wrong item is sent or if delivery on a certain day was guaranteed but was not timely delivered. Contact your credit card issuer to discuss the purchase protections available to you.
Debit cards purchases do not fall under the purview of the Fair Credit Billing Act. Though, purchases with a debit card may have protections offered by the issuing bank.
Are you are struggling to pay your credit card debts?
If you’re deep in debt, have fallen behind on payments, and your credit card debt is mounting, it is time to take back control of your finances. Take an honest look at your situation. It may be time to explore all of your debt relief options, including bankruptcy.
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