6 Ways to Fuse Tech Smarts with Credit Savviness
Credit cards are one of the best and one of the worst inventions ever around. A credit card got me out of a jam one day when a trip to Chicago wound up with a dead car, a lengthy tow, a weekend stay in a hotel, and a $200 repair bill.
I’ve also purchased things that later on have made me scratch my head and wonder what I was thinking – an indoor maple tree tops that list for me. If you’re smart about using your credit card, however, you can actually use it to save money every day on the stuff you always purchase. Here’s how you can make that happen.
#1. Set up recurring payments. If you pay a bill every month and they take credit cards, then stop writing checks. Get a credit card that will give you cash back on all your recurring payments [1-2% cash back is normal]. Pay your rent with your credit card if you want. If you’re paying $400 per month on your studio flat, then that’s $8 headed back your way. That’s like 16 packets of ramen noodles, so it’s a good deal.
#2. Watch for rotating rewards. Some credit cards offer a rewards program where you’ll get extra cash back on certain categories every month or every quarter. Things like gas or groceries are pretty common, but if you like to get your back waxed, there’s probably a program out there that could get you 4% back on that if you want it. Look for options that make sense with your lifestyle.
#3. Pay off your balance. The moment you let a debt balance on your credit card fall outside of the grace period, it’s no longer saving you money. Emergency spending is one thing. If you’ve got to get an ultrasound on your gallbladder, then an MRI on your brain, and then drive 3 hours to a specialist who tells you to stop drinking so much caffeine, then paying monthly payments on those things makes sense. If you want a $6,000 Ultra 4K television and you work part time at Burger King… maybe not so much sense.
#4. Take advantage of a bonus program. A number of credit cards will offer you a nice bonus for signing up, especially if it’s your first-ever credit card. First of all, don’t fall for the phone calls that say, “Did you get your credit card? Would you like to spend money today?” if you aren’t using it much. Secondly, it’s a great way to pay school bills because some offers have 24 months of 0% APR. Thirdly, bonus programs usually have a sign-up reward, like instant cash back, free hotel stays, or little knick-knacks that you store on your desk. I took dragon statues for my first bonus.
#5. Don’t get the balance insurance. You can get an insurance policy that will pay off your remaining balance or make your minimum monthly payment for up to 12 months if you can’t find or get a job, but don’t sign up for it. One emergency with you out of work will have you paying 10% of your balance every month and that’s more than the minimum payment due. When someone tells you to break a leg in an interview, don’t take them literally if that’s your current circumstance, ok?
#6. It’s ok to say “no.” You do need to establish a credit history in order to get low interest access to loans in the future, but a credit card isn’t a must-have item. If you get told to apply for a secured credit card, don’t bother with it. Put that money for a secured credit card deposit into a Roth IRA. It’ll be worth more in the long run.
What was the craziest thing you ever purchased with a credit card? Did you purchase something stranger than an indoor maple tree? Share your stories below.