How to Use Credit Cards to Your Advantage
If you have good to excellent credit and you aren't already taking advantage of your credit cards, it's time to start. By remaining vigilant on current credit cards rewards and perks and taking advantage of them whenever you see a deal, you have the chance to save or make hundreds each year.
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Instructions
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If your credit card is not part of a rewards program, such as a 1 percent cash back on every dollar spent, call your credit card company and ask if it offers a rewards program. If so, take advantage of it. If not, apply for a credit card that offers one. You may be able to find cash-back rewards of up to 5 percent.
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Use your credit card for every single purchase, including small-dollar items such as food and gas. Then pay off the entire balance each month when due. If you spend $1,500 a month on your card, with a 1 percent cash back reward, you will earn $15 per month (more if you convert those points to airline miles). Plus, the money you would normally use to pay your expenses will earn a small amount of interest each month just by sitting in your checking account (if you do not have an interest rate on your checking account, consider opening one that does).
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If you are carrying a balance, take advantage and sign up for a 12-month 0 percent APR credit card that offers a balance transfer. When transferring your balance, you will have to pay a small fee (about 3 percent but typically no more than $75), however, you will save hundreds in interest by moving your balance to a 0 percent interest credit card. Pay off the balance in one year or move it to another 0 percent APR credit card. Make your payments on time each month, or your interest rate may shoot through the roof.
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If you travel regularly and your airline offers a credit card with an impressive airline miles bonus (look for one with enough miles to get a free ticket right away), take advantage of it. Before opening the card, be sure that there is no annual fee. You will likely need to make a small purchase to activate your mileage rewards. Do so, then pay it off immediately. You should be able to take your free flight immediately; however, your travel plans may need to be flexible to avoid blackout dates (such as spring break, summer or holidays).
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Be vigilant. Those with excellent credit scores may qualify to sign up for an American Express Gold card that comes with no annual fee and a $500 sign-up bonus. That's $500 in your pocket, no strings attached. Other credit card companies may offer free credit reports, gift cards and more. Never throw away credit card offers without at least checking them out.
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Tips & Warnings
If you have department store card such as a Macy's or Dillard's card and it offers a better rewards system than your regular credit card, use it when making department store purchases. Doing so may result in gift cards and exclusive coupons.
Opening too many credit cards can lower your credit score. Don't open more than two or three. With balance transfers, failure to pay the minimum balance each month will lower your credit score. Always read the fine print before accepting a credit card offer.
