At Money Monday$, we aim to make financial and credit matters simple. Today, it’s credit cards. You all know the basics (pay your bills on time, pay off your balance if you can, etc.). Beyond that, here are a few things you may not have thought about that can save you real dollars.
Which Card to Use? If you are carrying a credit card balance, you are incurring interest on your daily balance. Therefore, you aren’t getting a grace period on your new purchases – you’re paying interest straight away. If you can, in this instance, pay cash or use a different credit card without a balance. If you don’t carry a balance and can pay off your balance each month, you should use a credit card with rewards that you will actually use for your everyday purchases (see note below, though, on annual fees).
Be a Squeaky Wheel. If you are carrying a balance, call your credit card company and ask for a lower interest rate. Generally speaking, they’d rather have you at a lower rate than lose your balance all together.
Avoid Annual Fee Cards. If you are shopping for a credit card and generally don’t carry a balance, find a card without an annual fee or with a lower fee. If you carry a balance, you should be more concerned about the interest rate. For rewards cards, weigh whether the rewards benefits you get are worth the annual fee. Also, think about whether the “status” cards are really worth it – they do the same things as more basic credit cards but can have a hefty fee attached to them.
Keep an Eye on the Interest Rate. Credit card companies can raise your interest rate for any or no reason. Of course, they have to let you know when they do though, often, many don’t pay much attention to these notices. Keep an eye on your interest rate and, if necessary, move balances to another card if you find the rate on one card is higher (though watch for fees in moving balances).
Double Trouble with Late Payments. You know you can get a late payment fee if you miss your payment date, but did you know that a late payment can cause you to incur a higher interest rate? This can really add up. It may take you six on-time payments to get it re-lowered.
Introductory Rates. Be careful with introductory rates and the “free” checks that appear in your mailbox. While they can offer you a respite from interest, make sure you read the fine print – many have strings – and fees – attached.