5 Simple Credit Card Strategies for Smarter Spending That Can Save You Thousands
-
Written by
Harrison Pierce
-
Edited by
Amen Oyiboke-Osifo
-
Reviewed by
Jasmin Baron
Whether your favorite products are getting more expensive or you’re saving up for a dream vacation, it’s always a great idea to look at ways you can be a smarter spender. Credit cards can be incredibly powerful financial tools to reward you for purchases and spend less at the checkout counter.
With so many different credit cards on the market, there’s an option out there for any type of shopper. For instance, the best cash back credit cards give you money back on every purchase. Travel cards might give you discounts on flights, and general rewards cards typically have access to shopping portals where you can take advantage of exclusive discounts.
Even if a credit card has an annual fee, you can often easily justify this fee by getting a much higher dollar value from the suite of benefits, savings and rewards you receive as a cardholder.
Here are five easy credit card strategies you can use to save money.
Maximize Rewards Categories
Most credit cards allow you to earn rewards in the form of transferable points currency, cash back or co-branded hotel or airline miles. No matter which option you choose, your focus should be on earning as many points as possible through your day-to-day spending. Some cards will offer a flat rate of points per dollar on all purchases, while others will earn more on some categories of purchases than others.
To maximize your earnings, analyze your monthly budget to see where you spend the most money. Then, you can compare the best credit cards for bonus categories to find a card with an earning structure that aligns with your spending.
Redeem Rewards Strategically
Once you’ve accumulated enough points and miles, you can redeem your rewards strategically. Although you might notice a variety of redemption methods, they don’t all have the same value. For instance, you might be able to redeem your points as a statement credit or check for a value of 0.8 cents per point, or you can transfer your points to a hotel or airline partner for a value of 3 cents per point.
The best travel credit card for you will vary depending on your goals, but you should choose a travel card that lists your favorite hotel or airline as a transfer partner. That way, you have more flexibility when it comes time to redeem. It takes some time to learn how travel credit cards work, so carefully compare all of your options before starting your redemptions.
Redeeming cash back rewards is typically a straightforward process. Most of the time, cash back rewards are earned as points that can then be redeemed as a statement credit to your account or direct deposit. These cards have fixed rates of redemption, so you don’t need to worry about being super strategic.
Leverage Welcome Bonuses
Welcome bonuses are a fantastic way to earn a significant number of points in a short amount of time. When you get approved for a new credit card, you’ll be able to earn a set amount of points, miles or cash back after meeting a spending requirement. While the best rewards credit cards allow you to earn the most points through a welcome offer, they also tend to have the highest spending requirement. Be sure you’ll be able to meet the requirement within the time frame so you don’t leave money on the table.
Take Advantage of Money-Saving Benefits
Surprisingly, your most significant credit card savings might not come from your earnings and redemptions. The best credit cards come with a suite of benefits that can help you when you need it most. For instance, credit card travel insurance can save you hundreds of dollars (or more) if something happens during your trip.
Rental car insurance is another valuable benefit that is often overlooked. If a credit card offers primary rental car insurance, you can decline coverage at the counter, which already saves you a bit of money. If something were to happen to your rental during your trip, the policy will cover you up to a certain amount. Make sure to read the terms, conditions and exclusions so you understand what is and is not covered.
Other credit card perks, such as access to shopping portals, discounts and purchase protection, can also be helpful. Card shopping portals can give you discounts or cash back on your purchase with select retailers, and they can also allow you to earn bonus points on your purchase. Before any online shopping, make sure to log in to your credit card account to see what offers are available.
Save on Interest
If you’re struggling to pay off high-interest debt, the best balance transfer credit cards can be a lifesaver. These cards allow you to transfer your debt from another card and pay it off interest-free over time. The best cards can give you anywhere from 12 to 24 months to pay off your debt before it starts accruing interest again, which provides you with a bit of time to manage your payment.
Note that you will need to pay a balance transfer fee, which is typically 3% to 5% of the balance you are transferring. Still, this fee is worth it if you’re paying 20% interest on a credit card.
Similarly, the best low APR credit cards let you take advantage of a low APR window on purchases. If you have large purchases to make, like furnishing an apartment or buying a new laptop for school, you can split that payment throughout your intro APR window to avoid paying interest.
Bottom Line
While it takes a bit of effort to maximize credit card rewards, it’s worthwhile whenever you take a dream vacation, pay off debt or free up some space in your monthly budget. If you want to save money using credit cards, following these strategies is a great place to start.
