Saving Money with Credit Cards
Having a credit card is a wonderful convenience for those times when you don't have immediate access to your cash. It can allow you to purchase something on time for which you can pay later, thereby giving you the ability to afford something NOW that you'd have had to save for later. But buying on credit will also cost you money - in that way it's no different than taking out a loan to buy something that you want. There are, however, ways to save money when you buy with credit cards.
0% Balance Transfers
One of the most common ways to save 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 savings there. If you are carrying a balance of $1000 on a credit card that has a 19% APR and transfer it to one that offers 0% introductory APR for 9 months and a 15.9% regular rate, here's how your savings stack up:
Interest on old card for one year:
1000
x .19
$ 190 annual
$ 15.83 per month for 12 months
Interest on new card for one year:
1000
x 0
$ 0 per month for 9 months
$1000
x .159
$ 159 annual
$ 13.25 per month for three months
for a total of $39.75 for the year.
That's a total savings of $159.25 for one year.
You can, however, save the full $199 by paying off the entire $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 choose a card with a lower APR, but before you jump for the card with the lowest interest rate, take the time to figure out your own buying habits. If, for instance, you tend to carry no balance or a very low balance from 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 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 makes little sense to choose a credit card that offers a 10% APR with a $29 annual fee.
On the other hand, if you carry a $500 balance from month to month, you'll pay $95 in interest for the year at 19% - but even adding in a $29 annual fee, you'll only pay $79 for the year at 10%.
Don't just assume that the lowest interest rate is the least expensive card. Do the math - and save money with your credit card.
Save Money with Your Credit Card Rewards Program
Cash back and reward points programs are another way to save money with your credit card. If you use your card often but still manage to keep your balance low, you can save 1-5% on purchases that you'd make anyway. Many cards these days offer 5% cash rebates on any purchases made at gas stations, convenience stores and supermarkets. In many cases, those rebates are applied directly to your bill. If you purchase your groceries with your credit card AND PAY THE CARD OFF immediately, you'll end up saving 5% on your grocery bill all year long.
Joseph Kenny is the webmaster of the credit card comparison sites http://www.credit-cards-info.com/ and also http://www.creditcards121.com/
MORE RESOURCES:
 MSN UK News | Credit firms on Facebook 'breaking the rules' Telegraph.co.uk, United Kingdom - Credit firms who target young people by advertising on social networking websites such as Facebook are breaking advertising rules, a charity has said. ... Facebook users warned about loan adverts Credit firms breaking rules with Facebook ads Credit ads breaking Facebook rules |
 Dallas Morning News | Regulators' moves to stop credit card tricks deserves vocal support Dallas Morning News, TX - Consumers should be applauding and pushing rules proposed by the Federal Reserve and other regulators to rein in some much-criticized practices of credit ... Good Question: You can raise that low credit score Barely surviving on credit cards Credit crunched? |
Credit Suisse, GE Raise $5.64 Billion for Infrastructure Fund Bloomberg - By Jason Kelly May 12 (Bloomberg) -- Global Infrastructure Partners, the private-equity venture created by Credit Suisse Group and General Electric Co., ... Global Infrastructure Partners Announces Close of US$5.64 Billion ... |
Telecom increases standby credit facility Stuff.co.nz, New Zealand - The new facility, with Telecom's existing bankers, replaces the previous standby credit facility which had a limit of US$500 million (NZ$654 million), ... TEXT-NZ's Telecom increased standby credit to NZ$800 mln Telecom Raises Standby Credit Facility |
MBIA posts huge loss on credit derivatives Reuters - The 2008 figure included unrealized losses on insured derivatives, such as credit default swaps, of $3.58 billion. Factoring in the unrealized losses, ... MBIA loses $2.4 billion MBIA (MBI) Reports Q1 Loss of $3.03 |
Credit-Default Swaps: Weapons of Mass Speculation Barron's - Buying credit-default swap protection is the ultimate bearish bet. But don't be fooled by the low profile of the business. In the decade since credit- ... |
 MyFinances.co.uk | 2nd UPDATE: HSBC 1Q Profit Ahead Of 1Q07 Despite US Impairments CNNMoney.com - In February of 2007, HSBC became the first bank to acknowledge losses on subprime mortgages, or loans to borrowers with weak credit histories, ... HSBC takes £3bn credit crunch hit HSBC takes further hit from credit crunch HSBC bank hails profits increase |
 CPI Financial | United Rentals' $1 bln senior secured credit facility rated 'Baa3 ... Forbes, NY - United Rentals (nyse: URI - news - people ), Inc.'s existing rating of 'Ba1' for its senior secured credit facility was not affected by these rating actions ... Target ratings, outlook unaffected by credit card receivables sale ... TFN NEWS BRIEFING: Banking and insurance highlights to 09:15 BST Moody's Investors Service Names Michel Madelain As COO |
IndyMac swings to 1Q loss, sees 2008 loss The Associated Press - (AP) — IndyMac Bancorp says it swung to a first-quarter loss as deteriorating credit markets forced write-downs on the value of mortgage-backed securities. ... IndyMac Bancorp Reports First Quarter Loss of $184.2 Million ... UPDATE 1-IndyMac Bancorp reports quarterly loss IndyMac Bancorp swings to 1Q loss; doesn't |
 Telegraph.co.uk | Credit squeeze makes Dragon prey The Age, Australia - The global credit squeeze and the higher cost of funding it has induced is the key that Westpac chairman and former Treasury Secretary Ted Evans hopes will ... Westpac of Australia Offers to Buy St. George Bank (Update7) Bank of Queensland flags more mergers Westpac Bank in takeover talks with St George |
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