Credit Cards: How to Capitalize Owning One?
July 13, 2008
Credit cards today are a different animal than they were 20 years ago. It used to be that a credit card was only used to buy things now and pay later. The fierce competition between the credit card issuers has made it possible for cardholders to take advantage of owning a credit card.
One of the ways that card companies compete is by offering rewards or low introductory interest rates. These can be anything from cash back rewards to free flights. The reward is based on how much you use the card. There is a trick to this however and we are going to see how to use this to your advantage.
Rewards cards: You should shop around for the best deal you can find if you decide to go with a card which comes with rewards. Find rewards which you will actually use; for example, free flights as a reward makes little sense if you don’t fly often or do not plan to charge a lot on this particular card - these cards often require a lot of spending to actually get the rewards.
Shop around a little and find a reward that works for you. Cash back rewards are very popular. Be sure to read the fine print before you apply for the card. Ask the rep if there is a limitation on the amount of rewards you can claim. Some card companies will only allow you to claim a specific amount and once you get there, the rewards disappear.
Also ask them if there is a time limit on redeeming the reward(s) as some are only valid for a set period of time and then they expire unused.
If a gas station reward card looks tempting to you, make sure that there is a participating gas station near you before you sign up.
Low introductory rates: This is an interesting one. Say you have a credit card that carries a rate of 19% per annum (yearly). You have a small balance on it that can be easily paid off in say 180 days. In your shopping, you find a card that offers a 9.9% rate for new card clients for the first 12 months with no annual fees. In this situation, you could essentially take that card, transfer the balance to it and pay it off with less interest in less time. This could literally save you hundreds of dollars very quickly. The old card could be canceled or, if you have held it for some time, saved for emergencies.
Keep this in mind - when the credit card companies compete, you come out on top. Don’t be afraid to shop around for the best offer - the credit card companies want your business. You might be surprised by the deals you find!
Just be sure to ask the questions and do the homework FIRST. Haste makes waste, as they say.
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