Using your credit card to save and spend

2 May 2008

Credit cards can be responsible for household debt quite easily if used as a line of credit, but credit cards can also help families to save more and live better if used correctly. A low interest rate is meaningless in this situation, as an optimal user of credit cards will rely on interest free days on purchases to delay the necessity to pay in full, but will always pay in full on time. There are a few things to remember when using credit cards as financial helpers.

Get a rewards program

Go for the best rewards program you can afford, as proper usage of your credit card can negate the extra expenditure in annual fees. Reward points can often be spent on luxury items, so with planning you can greatly reduce your luxury expenditure.

Interest free days instead of low interest

Ignore the interest rates in favour of a full 55 interest free days on purchases and an excellent rewards program with benefits. Credit cards with a low interest rate are for people who will need a line of credit, but if you don't need the extra funding, if it isn't absolutely vital for you to use your card as a line of credit, then you should merely use it as an alternative to cash with extra benefits.

Shop for your vital things and normal expenditure where you will earn reward points

Don't go spending extra in order to earn more reward points as you'll earn plenty just through frequent use of your credit card. If you have a loan with a redraw facility you'll have an even bigger benefit due to being able to keep as much of your debt repaid as possible at any one time. Always be sure to repay you balance in full before interest is applied and use your credit card whenever it will give you a benefit to do so. You should see the difference in your spending capability in very little time if you become familiar with your reward program.

Please visit our comparison pages and rewards program page for a range of many excellent credit cards.

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