Amit, a Bangalore based entrepreneur is a frequent traveler. He was spending for all ticket purchases with his debit card, till a friend suggested that he opt for a travel centric credit card. Amit applied for the same which collaborated with various domestic and international airlines offering discounted fares. Now Amit could save money a lot on his travels, as every rupee spent on booking tickets and accommodation gets added to his card’s air miles, helping him to save on his next buy. In case of transit flights, Amit was able to relax in some of the most exotic airport lounges free of cost, something for which he was paying earlier.
Like Amit, many are using credit cards smartly as a money saving tool. If used smartly you too will find it be a good deal!
Here are 5 ways which credit cards can help you save money.
- Use rewards points but not reward cards always:
You already know aboutreward points oncredit card. Different card companies have different point system depending on the type of the card, which you can claim for cash discounts while purchasing from their collaborated retail chains and sites.
This doesn’t mean that you should always opt for a reward card. Many reward cards have higher interest rates when compared to regular cards. Credit cards give you an additional edge of saving money, but if you are in a habit of not paying the balance in full, don’t go for it.
For example, some regular cards charges 1.49% per month to 2.45% per month for late payments. But the same bank’s reward card charges 3.45% interest on lat payments, which means in actual you are not saving but spending more if you are paying only minimum.
- Choose the best fitting card for you:
Choose a card that specifically suits your lifestyle. If you travel everyday to your office in your own vehicle, it is good opting for a fuel card than a reward card. On the other hand, you don’t use your vehicle much for travelling and living in a joint family, a shopping card helps you as the entire purchases of the house can be streamed to it, provided that you repay before the due date. If you are not an avid shopper, a cash back card will be good for you than a reward card, as you can claim instant cash discounts instead of waiting for accumulating points. If you are a frequent air traveler, travel cards as a secondary card is a must have.
- Saving on Air:
If you are a frequent flier, opting for a travel centric credit card is a must have to get incentives on every ticket purchased and hotel bookings. The air miles accumulated can be swapped for your future trips. Using a travel credit card not only offers discount on the basic ticket but also an additional brownie for your next buy.
Cards usually pay up to 10 miles for every 100/- spent besides features like 10,000 Miles with your first spend, 3,000 Miles on card renewal etc, which is a good deal if you swipe often for travel and hotel accommodation.
- Catch all the good offers:
Don’t just ignore all those promotional mails hitting your inbox. Some of them might help you in saving, especially those from banks and credit card companies. Card companies run several offers from time to time, and many during festive time. Don’t just run behind them and say yes to everyone that comes to your way. But make use of those relevant ones. This includes discount on shopping, dining and for swiping at some partnered spas and even at your fitness centre.
5.Play it safe!
Say suppose, you come across an awesome high yielding equity investment opportunity. It happens these days of Bull Run. But you don’t have the money with your right now to invest. Don’t let the chance go. Withdraw against your credit card and pay back very fast.
Sounds like a weird idea? Here goes an illustration:
You withdraw Rs.50000 against your credit card from an ATM. The advance fee charged by your bank is 2%, which means you will have to pay 1000/-. The interest rate for the same is 3.25%, which means Rs.1625/- for a month. When you get your next month salary and you are repaying the cash advance very soon. Even if you pay 1625/- + 1000/- as a fee for it, you are still a gainer if your fund yields 16-18%. At 16% returns you earn Rs.8000/-
Caution: This is not an idea to be tried by everyone. Do it only if you are financially disciplined and good at paying bills promptly.
Credit cards come with a number of schemes and offers to attract customers. It is easy to get carried away with these. But an impulsive spending only put you in wasting than saving. Having multiple cards will not help saving as you cannot accumulate your points on one. So don’t fall into the trap of attractive sign up bonuses offered by cards.