It can be challenging to keep track of all the different ways to earn cashback because present-day credit cards are so rewarding. Many of them don’t make a clear distinction between actual cash and reward points that stand in for cash.
When used properly, credit cards are practical, convenient, and a nearly unavoidable aspect of adult life. They may even enable you to generate income or achieve other forms of gain. Work on developing some financial discipline before committing to a new or additional credit card because they may allow you to incur debt with a very high-interest rate if you are not disciplined. However, it would be good to compare and shop if you’re in the market for a new credit card. Here are some features to work with:
1. Pick A Credit Card With Low Fees
You want a credit card with minimal annual fees, ideally none at all. Many card issuers provide no-fee cards, which means you won’t pay anything for the right to use the card but will still be responsible for other fees, of course. Examine those additional charges thoroughly. Use a credit card for purchases, take advantage of any perks and benefits you are entitled to, and pay the balance in full before interest is due to make the most of the card. Also, it is important to understand the credit card limit before we commit to a card.
2. Check If There’s a Sign-Up Bonus.
A sign-up incentive is offered by some card issuers, usually with restrictions. They usually have very precise demands. For instance, if you make a particular number of qualified purchases using the card during the first three months, you might be eligible for a bonus. Make sure you are clear on what constitutes a qualifying purchase, then make a strategy to spend (as well as pay off) the required amount in the stipulated duration. Congratulations! Your bonus has now been earned. In case it is not auto-applied, don’t forget to claim it.
3. Pick The Cashback Offers
Generally, cash-back credit cards give you money back on a small portion of your purchases. On the majority of these cards, you’ll often get between 1% and 2% back. This is the same as receiving a (very slight) discount on every purchase you make with that card. For certain purchases, like groceries or petrol, certain credit cards provide a bigger benefit. Others reserve their cash-back rewards for purchases that exceed a particular threshold.
4. Pick The Valuable Rewards
Rewards cards come in various forms, but not every rewards card offers cash back. Some provide prizes like points, miles, or other rewards. When looking for a new card, carefully read the terms and conditions. Some of these will apply to you far more than others. You’ll also discover that some cards in this category provide better rewards for specific transactions. For instance, an Amazon credit card offers more points on Amazon purchases compared to other purchases.
5. Keep Note Of Balance Transfers
If you’re looking to consolidate other debts and save money on interest payments, this might be helpful. Balance transfer cards let you transfer debt from one card to another and defer paying interest for a predetermined period of time. They might also provide short-term interest-free borrowing. In the near term, this can lower your interest payments on existing debt, but you’ll need to tread carefully in these circumstances. You will suddenly be required to make an (often extremely hefty) monthly interest payment on any sum you haven’t paid off once the interest-free time is up. When using credit cards, be certain that you have a strategy in place to settle the debt in full before interest is applied.
6. Look For Other Available Perks
Some credit cards include extra benefits, such as complimentary event tickets and travel insurance. These premium cards typically have an annual fee. Again, this implies that you must carefully consider the options presented and determine whether paying the charge and utilizing the benefits will be financially advantageous for you.
7. Take Advantage of Credit Building
You should look for a credit-building card if this is the first time you are going to use a credit card. These are frequently made available to young adults or students. To begin with, you’ll be given a modest spending limit, and interest rates can be exorbitant. However, when used appropriately, these cards can aid in raising your credit rating. How do you utilize them effectively? The answer is simple – just like you would any other credit card. Plan out your purchases with them, stay within your means, and pay them off completely at the end of the month.
If you’re still unsure of all the workings of a credit card, credit card limits, and so on, you can read up about it on Fi Money’s finance blog. It’s simple, easy to follow, and comprehensive.
The Bottom Line
Always make the minimum payment if you can’t pay them off completely due to an emergency. Keep in mind that if you don’t pay off your credit card each month, you’ll accumulate interest and lose all of your gains very quickly. While it can be tough to keep constant track of your payments, Fi Money offers a platform where you can get a holistic view of your finances and set reminders to pay off debts and achieve your financial goals. Building your credit won’t directly result in you making money, but it could place you in a better financial spot down the road.