Why do you need a credit card?
Get yourself a credit card if you have not already. Who doesn’t want to make some money while they spend money. Yes, you read that correctly, make money while you spend it. Credit cards are for our benefit! if we could just figure out how to make the right decisions while using them. I am going to show you a couple methods on how to use a credit card wisely and make money.
Without a credit card you are left with whatever amount of cash you have in your bank. With a credit card you do not need to have money in your bank to make a purchase.
Using a credit card when shopping or making payments gives you extra time until the monthly statement is due. Sort of like an installment payment.
You need a credit card because you can make purchases while you deal with the comma disappearing from your bank account.
A credit card helps boost your credit score. When you use a credit card you are barrowing someone else’s money, and when you pay it back on time consistently you become worthy of trust.
And the most important part of having a credit card is protection. When making purchases with a credit card you are not directly paying with your money.
So, if there were to be any fishy transactions on your credit card it wouldn’t directly affect your bank account where your actual money is.
Now that I have convinced you to get a credit card if you haven’t already, let’s figure out the methods in which you can use a credit card wisely and make money.
3 ways to use a credit card wisely and make money
Bi-monthly method
Typically, the way credit cards work is by monthly statements. Each statement balance needs to be payed off by the end of the month or payment period. What if I told you that you can pay off your purchases every two months?
If you understand this simple trick you will be able to start having a bi-monthly statement and gain an extra month of time to pay off your purchases.
Let’s say you start a credit card today, and the selected day for paying off your monthly statement is the 20th of every month. This means whatever is purchased before the 20th of March, for example, will be due by the 20th of April.
How the monthly statement works is on the 20th of every month whatever it is that your credit card balance is it will be the statement for the month.
So, let’s say you go out and buy shoes for $120 and a new hand bag for $45 on the 15th of March. On the 20th of March your credit card will tell you that your statement due by the 20th of April is $165.
The question is what happens if you pay off the $165 before the 20th of March or before the statement is calculated? Well your statement for March will be $0, and $0 will be due by the 20th of April.
This means that if you pay off your credit card debt before the statement date you will have a balance of $0 to pay off for that statement period. Whatever you purchase after the 20th or whenever your statement date is will not be due for two months.
When is the best time to go out and shop?
The week of your statement balance. For this example, it would be the week after the 20th of each month. Whatever you purchase will have two months until it is due.
This method will help you save money instead of falling into credit card debt and having to pay interest.
0% APR method
0% APR is probably my favorite feature about credit cards. Taking advantage of a 0% introductory APR is a great way to plan for high purchases. Why? Because you won’t have to pay the amount you purchased in full until the 0% APR period is over.
APR stands for annual percentage rate which is a calculation used to charge users on unpaid balances and balance transfers in regards to credit cards. If you have a credit card and you only choose to pay the minimum payment every month, you will be charged an APR percentage for those unpaid balances.
This is why I love 0% APR introductory periods because I can pay only the minimum payment if I am struggling that month and not have to worry about APR fees.
One of the ways I was able to take advantage of having a 0% APR was paying for college. I was able to squeeze in payments for classes because I had 15 or 18 months to pay it off.
0% APR should definitely be on your check list next time you are looking for credit card offers
Cash back and Bonuses
If you didn’t see how you were able to make money using a credit card in the previous methods you will here. Whenever you get a credit card please don’t miss out and pick a credit card without a bonus or cash back on purchases.
What is cash back?
Cash back is a bonus percentage given on qualified purchases using the credit card. For example, if you have a 1.5% cash back on your credit card and you buy an airplane ticket to Florida for $250 you will get a bonus of $3.75 back.
This might seem like nothing on the small scale, but if you calculate it annually you will be surprised by how much you will save. For example, the average monthly expenses in the US is around $3,400 which means annually it will be around $40,860.
If you take the $40,860 and calculate the cash back it will be around $600. I don’t know about you, but I can definitely benefit from that extra $600 a year. Remember this is money coming back without cutting down on any expenses.
You probably already know about the new credit card entry bonus. Basically, you get anywhere from $100 to $500 bonus if spend a certain amount with your credit card within a certain period of time after you accept the credit card offer.
You might ask, if credit cards are so beneficial like you claim, what is the catch? I will tell you that the catch is the high fees and the interest. If you don’t use the credit card wisely you will end up with a mouth full of debt.
I am sure you can’t wait to start gaining from your credit card, below I will show you how to find a credit card without applying which will prevent any change to your credit score.
How to pay off credit card debt
It is all nice and lovely to learn about the benefits of having a credit card, but what about if you are already in debt? How can you get out of this debt?
There is the obvious way and then there is trick that you can do to get you a boost of energy to pay your credit card debt of faster.
The Obvious
create a budget and cut down on some expenses and I have a video you can watch on how to create a budget as well as a video on how to create a budget to pay off your debt faster.
The Trick
avoid accumulating more and more interest by the time you pay off your debt. The way to do this is to get a credit card with 0% APR on balance transfers and introductory period.
For example, let’s say you have an outstanding balance of $20,000 on your credit card. Assuming you have a credit card with an APR of 18% and a minimum payment of 2% of the outstanding balance or $25, whichever is greater.
If you make only the minimum payment each month, it will take you approximately 297 months (or nearly 25 years) to pay off your balance, and you’ll end up paying over $33,000 in interest charges alone.
If you increase your monthly payments, you can pay off the balance faster and save on interest charges. For example, if you make a monthly payment of $1,000 (5% of the outstanding balance), you could pay off the balance in just over two years and pay approximately $4,800 in interest charges.
To avoid all this a balance transfer will lower the cost as well as give you a time period where there will be no interest fees charged.
Balance transfer fees are typically a percentage of the amount being transferred, usually between 3-5%. So, for a $20,000 balance transfer, you could expect to pay a balance transfer fee of $600 to $1,000, depending on the fee percentage charged by the credit card issuer.
Now you have the period of 15 or 18 months to pay of your credit card debt while only having to pay the transfer fee.
I am not a financial advisor. These are just tips that I found to work out for myself or someone I know.
How to get credit card deals without hurting your credit score
I have found that searching for credit card deals and applying for them will just hurt my credit score. It felt like every single time I would apply for a credit card I would get rejected.
One day I woke up and I found an offer on my doorstep for a credit card. As I picked it up I realized that this letter wasn’t coming to me out of the blue. There has to be an algorithm to it.
Of course, Google knows more about us then we do! Ads on the internet are based on our preferences and what we do online. Why couldn’t these credit card offers be the same as how google ads are?
Searching for the specific offer you want for a credit card on the internet will trigger the credit card companies. They will then send you a prequalified offer in the mail.
For example, I am looking for a credit card with an entry bonus and a 0% APR for 15+ months. All I do is type credit cards with 0% APR for 15+ months and an entry bonus into Google.
Wait for a couple weeks and bingo! There should be an offer letter at your doorstep with similar benefits to what you were searching for on Google. Too easy huh? It works though!!
That’s that, I know you are set now to use a credit card wisely and make money. Next, I think you would enjoy reading this post: Best ways to maintain a shopping budget
So long…