Many view credit cards in wrong way, for them using credit cards is a sin. Credit cards encourages people buying things that are not affordable. True, the same way carrying gun is a sin. But, in reality neither is a sin. As long as you know how to use them and most importantly, how and when not to use them, you should be doing wonders. One will protect yourself from evil and the other will bring your comfort.
As I discussed in how to handle your credit cards, to make most from your credit cards, you first need to pay entire balance each month. If you don’t do that then you should not use a credit card, period! Credit cards should not be used as personal loan. There are other reasons to get personal loans. So, in order to enjoy all the good things a credit card offers, you’ll need to maximize the rewards and make the charges and fees zero.
(Related – Wise use of credit card can help you avoid debt)
Choosing your credit card is tricky, it depends on your buying habit and family needs. If you have a long commute, you’ll probably need a gas card. If you’;re a frequent traveler, you’ll do better by applying for a travel reward credit card. Let’s explore it in little more detail.
Why You Probably Have The Wrong Card Right Now
Recent research carried out by TotallyMoney.com has found that over 4 out of every 5 credit card users in the UK have the wrong credit card in their wallet. This is an alarming statistic, especially since the average saving that could be made by switching cards clocks in at around £650.
The research shows that Britain isn’t making the most of its cards, potentially losing over by paying £7 billion in interest payments every single year. It’s your money so why should the banks get it? Until now it has often been complicated to find the right card, but now it’s easier than ever to do so.
Finding The Right Type of Card For You
- If you’re currently paying interest on loans, cards or other debts then a getting accepted for a 0% balance transfer card would stop your interest payments for up to 28 months, saving you (on average) £650. That’s 3 times the average amount you’d save comparing car insurance!
- If you need to make a big one-off purchase then a 0% purchase deal could help you to spread the cost over a few months. In fact there is currently no cheaper way to borrow anywhere. The average saving is a massive £400.
- If you pay off your balance on time then you should be rewarded. Cash back and rewards schemes could allow you to make money while you spend but which are the ones that actually pay out the most value to you? If you think it’s not worth the effort, consider the right cash back card earns the average household a massive £800 a year and what’s more you get better consumer protection when you pay on a credit card.
(For more – While choosing the right credit card, consider these 10 factors)
Finding the Exact Right Card For You
Millions of people use comparison sites to help them find the best deal on the market every year. For credit cards this should be no different. Everyone should be comparing and switching at least once a year because put simply it make hundreds of pounds of difference and with careful consideration means that you probably won’t have to change your spending habits at all.
Making the most of your credit card is all about choice but currently less than 5% of people are exercising that choice by comparing and switching cards regularly. Next time you check your credit or debit card statement think about how much money switching to the right card could save you.
If used carefully, credit cards should be seen as powerful tools for saving and money-making. Nearly everyone has one, nearly everyone has the wrong one and nearly every one could save hundreds and some even thousands of pounds by comparing and switching credit cards.
Even for many, exercising self-control is difficult, these are the people who buy things on credit and pay off only the minimum due amount on their cards every month. If you are one, probably, you should never use a credit card.
(Related – Should I use credit card or debit card)
Readers, are you making most out of your credit cards? Are you handling your card well? let us know if you have some other tips to share.
Survive The Valley says
I’m a huge fan of credit cards, but probably because I’m super diligent about paying off my balance each month (I’ve never rolled the balance over and paid interest charges). Getting rewards/cash back/points is a no brainer vs. money.
For those who don’t have the discipline to charge only what you can pay off each month, try using a tool like Mint.com to alert you to pre-set spending limits. Or… just pay someone like Mr. Money Mustache to punch you in the face every month =)
Matt Becker says
We use credit cards for just about all our purchases. We have a Fidelity Amex that gives us 2% cash back on everything. Very simple.
Kostas @ Finance Zone says
If you are paying off your balance each month, like Survive the Valley, I can see how that could be beneficial. Once you let the balance carry over, and not pay it off in full, that’s when problems can start. Getting into a financial money pit over credit cards can be incredibly dangerous waters to step into.
[email protected] says
One of my problems in the past was using credit cards as a personal loan which caused me some debt. Now I look at credit card use differently.
Tushar @ Everything Finance says
I handle my card(s) quite well. I have more than one because there are some purchases that I get more of a benefit from on one card than another, and vice versa. I use my card for everything (Rewards points), but pay it off so I don’t incur any interest.
High Risk Credit Card Processing says
Totally agree that most of the people think using credit card is a sin. it only depends on you must know how to use whether it is a gun or a credit card.
If you’re not smart about it, you can pay hundreds or thousands of dollars a year in unnecessary fees.