Would you like to maximize your financial savings by choosing the correct credit card? There are so many options in the marketplace for credit cards that it can be really overwhelming to choose the right one for yourself.
“Credit card” and “savings” don’t always go together but in this article, we'll share ten expert tips that will help you choose the right credit card for your financial needs.
1. Identify Your Savings Goals
The first step to selecting the best credit card for your needs is to identify your long-term savings goals. Are you wanting to save for the down payment on a house, a dream vacation, or your child's admission to college?
Knowing your specific needs and desires will give you an idea of how to decide which credit card features are important.
2. Look at Rewards Programs
Many available credit cards have reward programs with which you can gain voyager miles, points, or even money back on certain purchases. Look out for those credit cards that offer bonus rewards in areas where you spend most of your money. For most people, these usually include areas such as groceries, dining out, and gas purchases so rewards here would certainly help move you closer toward your savings goals.
3. Leverage Sign-up Bonuses
You’ve probably seen that many credit card issuers offer welcome bonuses when you sign up and spend quickly on a new credit card. Of course, you normally have to spend a minimum amount on your card within the first three months to get the bonus. However, if you’re smart, you can use this to your advantage. Firstly, bonus rewards count as non-taxable income when it comes to tax time (You had to earn them by spending so they’re considered a rebate).
How is it useful if you have to spend on your card? Well, if you have a large upcoming purchase to make anyway, such as a trip or a wedding, you can meet the minimum spend on your new card by charging the special occasion to it. Then, pay the balance off quickly so that you don’t accrue interest.
4. Choose No Annual Fees
Many credit cards charge annual fees that can be as high as about $600 per year. However, there are also many credit card providers that don’t charge this fee. Cards like this mean that you won’t have to assess the value of what you’re getting each year to justify having the card. Keeping the account open costs you nothing. These cards are particularly beneficial if you’re on a tight budget and want to maximize the rewards earned by your card. Plus, they’re much easier to get approved for. As an additional benefit, such cards target the average householder who is trying to maximize their everyday spending. So, you’ll get high rewards rates on common items like gas and groceries.
5. Negotiate Low Interest Rates
Low-interest credit cards offer a lower-than-average yearly percentage rate. If you want to carry a balance on your credit card, it's most important to ensure an option of low interest. Of course, paying off your credit in full every month will help you avoid interest charges but if you do happen to carry a balance, a low interest rate is worth negotiating.
6. Know about Balance Transfer Offers
A balance transfer offer can be quite useful if you already have some existing credit card debt. This facility will help you save loads of money in interest while enabling you to pay off the balance quickly. Be on the lookout for a credit card that comes with a 0% APR on balance transfers for a period, such as 12-15 months.
7. Check Out Redeem Options
Some credit cards are more lenient than others in redeeming rewards. Look for a card that allows redemptions of rewards for cash or statement credits, or gift cards, all easily applied toward your savings goals.
8. Look for Authorized User Benefits
Some credit cards give their authorized users bonus rewards or account management tools. If you're likely to add authorized users to your account, then look for a card that offers valuable perks to help them contribute to your saving goals.
9. Check-in with Travel Benefits
If you travel frequently, look for a travel benefit credit card that offers free checked bags, access to an airport lounge, or even travel insurance. With these rewards, you can save some of the money you usually use for travel expenses and divert it into your savings.
10. Keep Track of Your Credit Card Use
Once you’ve picked a credit card you’re happy with, it is essential to monitor your card usage and spending patterns, particularly if you want to save. You can set up alerts on the system with certain spending thresholds. Examine your monthly statements as well for areas in which expenses can be cut.
Conclusion
Knowing how to choose the best credit card for your savings goals will require some careful thought regarding your spending habits, reward preferences, and financial aims. We’ve given you ten expert techniques that will help you choose a credit card to maximize your savings and minimize your excess spending.
Always use your card responsibly by paying up the balance in full each month, thus avoiding interest charges and keeping a healthy credit score.
