Ever feel overwhelmed with figuring out how to save money with your credit cards?
I’m totally with you, friend.
After five years of traveling internationally for my job, I quickly found extra, unexpected costs with travel. I also found there are several incentives and benefits with using credit cards over debit cards regardless of whether you’re traveling or not. As I became more familiar with my credit cards and the rewards they offer, I was able to capitalize on the incentives they offer.
By using my credit cards to earn extra airline miles when I was traveling for my job, I was able to later fly my two sisters and I to Europe for a two-week holiday. The joy of being able to offer a low-to-no cost trip to Europe for my sisters was an incredible feeling. I realized with a little bit of knowledge and insight into using my credit cards, I could reap great benefits down the road.
Buuuut….we all know it can be challenging to figure out all the benefits of credit cards, finding ways to maximize those benefits and experiencing the rewards from your cards to save money. It’s important to know the benefits of your credit cards to help make smart purchases – and ones that will help us save money.
I wanted to share with you five ways you can save money using your credit cards. With the holiday season just around the corner, now is the time to start using your credit cards to maximize your rewards and save you money.
5 Ways Credit Cards Can Save You Money
1. Avoid Foreign Transaction Fees
Traveling internationally? The cost of travel can add up quickly. Whether you are sightseeing, enjoying international cuisine or purchasing souvenirs for loved ones at home, the costs of traveling can add up and leave a big dent in your budget.
Saving money through no foreign transaction fees can alleviate the pressure on both you and your budget. A foreign transaction fee occurs when you make a purchase (or charge) in a foreign currency. Typically, the foreign transaction fee is 3% of each transaction in U.S. dollars.
Doesn’t sound like that big of deal?
Three percent might sound small and insignificant number, but it can add up over the duration of a trip. For example, if you were to spend $100, you will pay an additional $3 in foreign transaction fees. The extra $3 fees per $100 add up over time.
Foreign transaction fees can add up and push you over your budgeted amount for travel. Credit cards with no foreign transaction fees can eliminate those extra costs without eliminating the experience of traveling.
2. Take Advantage of Perks
Credit cards often have perks, rewards, bonuses or incentives for the cardholder. When you use your credit card, you can earn points with each purchase, and later redeem these points for a variety of rewards.
Common credit card perks often include, but are not limited to the following:
- Balance transfer
- Low interest
- Cash back
- Reward points
- Hotel and travel points
- Retail rewards
- Gas points
- Airline miles
Some credit cards have multiple perks and incentives for the cardholder. With some of my travel credit cards, I can earn airline miles, avoid foreign transaction fees and check my luggage for no charge. Individually, those costs may seem small, but together the costs can add up to be a lot of money. You can stacking incentives to maximize your savings.
When looking at credit card options, be sure to check out what reward or incentives they offer. You won’t want to earn hotel or travel points if you have no intention of traveling, but might find the benefit of earning cash back or gas points more valuable. Determine what is valuable for your lifestyle and then earn rewards or points that will be useful to you.
3. 0% interest balance transfers & introductory rates
Interest on credit cards can be pretty high, making them a less than desirable option to use. Several credit card companies have an introductory rate of 0% that makes them a better and more desirable finance option. During an introductory period with the 0% interest rate, cardholders won’t pay for the added interest on their purchases.
Balance transfers, much like introductory rates, can also save you money.
Transferring a high credit balance to a credit card with 0% interest for balance transfers can help you pay off the balance with no added interest during the introductory period. Balance transfers do not allow all types of debt or loans. If you have a loan or debt outside of credit cards, you will have to check with the credit card company to ensure they will transfer the balance.
4. Purchase Protection
Many credit cards come with purchase protection.
Purchase protection usually allows for the consumer to submit a claim for theft or accidental damage within a certain amount of time. It also allows the consumer to retroactively apply a lower price to an item that was purchased.
If something you purchased is lost, stolen or damaged, your may be able to replace, repair or get reimbursed for your purchase depending on your credit card’s purchase protection policy.
Each credit card company has different purchase protection policies. If you have a claim to make, check with your credit card company to find out if your purchase or item is eligible.
5. Boost Your Credit History & Score
If you are looking to improve your credit score, you can use your credit cards to help you. Improving your credit score takes time. With a little patience, you can start to rebuild your credit.
Your credit score is comprised of five key areas: payment history, how much you own, credit mix, length of credit history, how much you owe.
Here are three easy practices (or habits) for improving your credit score:
Pay your credit card each month on time. Missed or late payments can have a big impact on your credit score.
Don’t max out your spending limit. How much you owe is factored into your credit score. A high amount of debt can have a negative impact on your credit score. Keeping your credit balance at 30% or less is recommended.
Keep your unused credit accounts open. The longevity of your credit accounts influence your score. Opening or closing accounts can ding your credit score. You can achieve a high score by keeping your unused accounts open and increasing your average age of your credit history.
Managing your credit cards responsibility is important. Building in healthy habits and create systems to help you save money, earn rewards and stay on top of your credit score.
What ways have you saved money using your credit cards? Let me know in the comments below!
Note: If you are still working on paying off debt or carry a balance on your credit cards, I personally think focusing on debt repayment and spending habits is important before you start utilizing your credit cards to earn extra points, rewards or cash back. Building those healthy habits around spending, budgeting and managing your money is important for your financial health.