Save on interest with your credit card
17 March 2008
Many people still don't know how to save on their home loan using their credit card, although it is a commonly employed method.
Interest on home loans is usually calculated daily using the entirety of your loan remaining. If you have a credit card that offers interest free days, however, and a loan with a redraw facility, you can set your finances up in a way that will minimise the interest calculated each day.
By having all of your pay deposited in your home loan, the largest amount of your loan is paid off. You can then use your credit card to pay for everything you need, and pay the card off just before the end of the interest free period by redrawing from your loan. In this manner, you accumulate no interest on your credit card purchases, and keep your mortgage debt at the smallest possible amount at any one time, reducing the interest charged. By using a credit card with a rewards program, you can even earn bonuses by only spending what you normally would each month.
To compare the best cards with interest free days, please visit our credit card comparison pages.
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