Why do you use a credit card? Most people will look confused if you mention to them that you use your credit card to save money. The most common associations people make about credit cards are fees and an increasing credit card debt.
True, credit cards can easily become be a double-edged sword if not handled properly. An unsettled debt can easily grow out of control. Yet, there are compelling reasons to own a credit card and squeeze some considerable money out of it every moth.
1. Cretit Cards with Cashbacks
Nowadays most credit cards offer some kind of cashback or bonus system to its users. The vast majority of them offer between 0,5 and 2 percent cashbacks on purchases made with the card. It is not unusual that the credit card issuer offers additional cashback on purchases made from their product offer or through an associated chain of stores.
Cashbacks come in many forms. Some cards offer payouts in cash (or reduction of debt) on a regular basis. Others send their clients bonus checks that can be used in their stores. Credit cards affiliated with airlines usually provide discounted fees, class upgrades or even free travel within their cashback scheme.
2. Credit Card might give Better deals
Your credit card is usually simultaneously a membership card. It might give you access to lower prices or special deals. Many grocery chains for instance, offer monthly discounts to their loyal customers. In fact, if you are a regular customer at a certain store and you ignore their loyalty program, you will be one of those paying so that others can benefit from discounts.
3. Automatic savings with Credit Cards
You have probably asked yourself at the end of the month – where did all that money go? Small expenses add up. Nowadays there are credit cards that have observed this common issue and turned it into your favor.
Nowo for example, offers a credit card that automatically saves an amount as a percentage (which you decide) of every purchase you make. It is genius. You will likely not even notice paying, for instance, an additional 5% on each transaction. What you will notice for sure is how your savings account has grown towards the end of the year. Savings that maybe has helped improve your credit score.
4. Less exchange fees
Are you a frequent traveler? Then you are likely paying unnecessary exchange fees every time you travel. Nowadays few people exchange any large amounts of cash, although it depends on the destination. Most of us use a card. Regardless what you choose, there are exchange fees, which can sometimes be quite significant.
Here, choosing your credit card wisely can save you money. Some card issuers will charge you up to 2 percent in exchange fees. In exchange offices, the fee can be even larger due to the spread.
The solution: Get a credit cards that offers you 0% in exchange commission.
5. Free liquidity
Liquidity has its costs. Being well-off is not the same as having access to money. It might be tied up in savings, investments, art or real estate. While everybody should plan one’s finances and consider having some emergency savings on a bank account, everyday expenses can be covered freely with a credit card.
Credit cards have a grace period. According to The Credit CARD Act of 2009, a minimum of 21 days is mandatory for all cards that offer a grace period in the US. In Europe, it is not unusual with even longer grace periods of up to 30 or 45 days. During this time, you may use your credit freely without having to pay any interest.
Just make sure to check what exactly the grace period covers. Most cards do not apply it for balance transfers or cash advances.