The average adult carries three credit cards and uses them for more than $300 of purchases each week. What this statistic does not reveal is the amount of interest, fees and other hidden costs that can accompany many cards, even those issued by major companies. What’s the best way to reduce your credit card expenses quickly? Here’s a short list of strategies and techniques they can shave hundreds, perhaps thousands, of dollars off your annual card expense.
Find Low Interest Cards
“It’s all about the interest rate,” as a famous economist once said when speaking about the International Monetary Fund. That adage applies to personal debt as well. By doing as little as a half-hour of research, you can uncover the cards that are currently offering the lowest interest rates. Some offers are for “new customers” only but others are for anyone. Look for legit sites that compare card features like interest rates, annual fees, customer service and more. Settle on a card that offers the lowest annual cost after adding up membership fees, interest, bonus programs, penalties, and over-limit penalties.
Make More than “Minimum Payments”
One of the worst possible ways to handle credit card debt, according to experts, is to pay just the minimum monthly fees. Always strive to either pay the entire balance off each month or remit some multiple of the minimum. Most consumers know the “golden rule” of credit card use: “Never carry a balance greater than 30 percent of the card’s limit.” Follow that guideline and you’ll never have a problem with credit card debt.
Take Advantage of Rewards
Credit card reward and bonus programs can save you a bundle. Card issuers use these arrangements to, obviously, get you to use their card more frequently. In return, some issuers fork over large amounts of “points” and bonuses that can amount to cold hard cash, prizes, huge discounts on consumer goods and even free trips. Every program is different so be sure to read the fine print on each card’s particular program. If you use the credit card regularly, your points are usually worth the fee, and depending on how the bonuses are structured and how generous they are, you can reap rewards valued well beyond annual fees.
Pay on Time and Never Go Over the Limit
Card users who never exceed their stated limits and always pay bills on time gain another advantage. For one thing, they won’t have to worry about those very high late-payment penalties and over-limit charges, which can be quite punitive. But more importantly, timely payments contribute to a solid credit score. Considering that every major credit card report to all, or at least one of, the bureaus, on-time paying is like money in a long-term savings account.
Years from now, you might be applying for a home or business loan. All those on-time payments, along with no limit-crashing, will mean you have access to much lower mortgage rates. So, while it might not seem like an instant payoff, timely bill-paying and wise use of credit limits is, in fact, a way to give yourself a leg up with credit scores and a brighter financial future.