Friday, January 30, 2009

Saving Money with Credit Cards

Having a credit card is a fantastic convenience for those modern times when you don't have got contiguous access to your cash. It can allow you to purchase something on clip for which you can pay later, thereby giving you the ability to afford something NOW that you'd have got had to salvage for later. But purchasing on credit will also cost you money - in that manner it's no different than taking out a loan to purchase something that you want. There are, however, ways to salvage money when you purchase with credit cards.

0% Balance Transfers

One of the most common ways to salvage money with credit cards is by transferring your balance from a high interest credit card to one with a low or no-interest card. It's easy to illustrate your nest egg there. If you are carrying a balance of $1000 on a credit card that have a 19% APR and transfer it to one that offers 0% introductory APR for 9 calendar calendar calendar calendar months and a 15.9% regular rate, here's how your nest egg stack up:

Interest on old card for one year:

x .19
$ 190 annual
$ 15.83 per calendar calendar calendar calendar month for 12 months

Interest on new card for one year:

x 0
$ 0 per month for 9 months

x .159
$ 159 annual
$ 13.25 per month for three months

for a sum of $39.75 for the year.

That's a sum nest egg of $159.25 for one year.

You can, however, salvage the full $199 by paying off the full $1000 during the 9 month introductory period.

Save money on credit cards with lower interest rates

It's fairly obvious that you'll pay less in interest charges if you take a card with a lower APR, but before you leap for the card with the lowest interest rate, take the clip to calculate out your ain purchasing habits. If, for instance, you be given to carry no balance or a very low balance from calendar calendar month to month, a low interest rate matters far less than say - a good rewards or cash back program, or no annual fee. If, on the other hand, you carry a balance from calendar calendar calendar calendar calendar month to month, the APR is the biggest determining factor in how much your credit card will cost you.

Just as an example, if you generally carry less than $100 on your credit cards from month to month, even an interest rate of 19% only works out to $19 a year, or $1.58 per month. In that case, it do small sense to take a credit card that offers a 10% APR with a $29 annual fee.

On the other hand, if you carry a $500 balance from calendar calendar month to month, you'll pay $95 in interest for the twelvemonth at 19% - but even adding in a $29 annual fee, you'll only pay $79 for the twelvemonth at 10%.

Don't just presume that the lowest interest rate is the least expensive card. Bash the mathematics - and salvage money with your credit card.

Save Money with Your Credit Card Rewards Program

Cash back and reward points programs are another manner to salvage money with your credit card. If you utilize your card often but still manage to maintain your balance low, you can salvage 1-5% on purchases that you'd do anyway. Many cards these years offer 5% cash discounts on any purchases made at gas stations, convenience supplies and supermarkets. In many cases, those discounts are applied directly to your bill. If you purchase your grocery store stores with your credit card AND wage THE CARD OFF immediately, you'll stop up economy 5% on your grocery measure all twelvemonth long.

No comments: