Keeping your Credit Card Costs Down

If you’re in a habit of not paying off the full amount of your credit card each month try to use your own money rather than paying with your card. Why pay an interest rate on your spending when you might be getting 4-6 per cent interest on deposit funds, sure beats paying up to 18.5 per cent by using someone else’s money. If the main reason you use your card is for convenience of plastic then why not try using a visa debit card instead.

If you’re plastic spending is more sporadic than constant then you won’t want to pay higher rates by being in a rewards program. Stick to a low or no fee credit card that way when you pay off your card at the due date you’ve saved on interest and account fees. If you do want the higher fee card with benefits then make a substantial effort to pay it off by the due date, pick a card which suits your lifestyle and spending habits, for example if you fly often for work and work reimburses you for the flight then it makes sense to use a flight reward card because you will end up with accumulated points and maybe a free flight here and there.

If you are really good at managing your finances then you may be able to get the best of both worlds and use an interest free card for your general purchases and pay this card in full on the due date by drawing from another credit card with a low interest rate. This is called a cash advance. At the end of the day your cheapest and most financially savvy option is the have no credit cards at all.

Choosing the right credit card for your spend

There are two basic groups of credit cards: credit cards that offer interest free periods and those that dont. As a rule of thumb the cards that offer “interest free” days are generally banking on you not paying your purchase off in time in which case you’ll be seing a higher interest rate. They are a business after all, and as such will often also have higher annual fees.

There is also another kind of card called a debit card however it is not a credit card so to speak but offers a economical alternative if its suits your spening habit.

The card which is best suited to you can be based on an evaluation of your spending habits and lifestyle. This is absolutely vital for keeping your costs down to a minimum. If you can keep a track of your credit spend then you should be able to track your general finances too.

Decide if you use your card for transactions or for borrowing or both. If you use your card mostly for transactions and you pay each month in full then take advantage of interest free days and rewards programs etc. If your a borrower then you want a card with low interest rates.

“No Interest Free Days” Credit Cards
Generally these cards are no frills cards so they wont offer you rewards or have annual fees however you will have no interest free days so each day up untill you recieve your account the interest will be calculated.

“Interest Free Days” Credit Cards
You have to pay off the outstanding balance in full by the due date to get your interest free days, if you can manage that then great but you need to be aware of annual fees and make sure that the rewards or benefits you are getting substanciate the fees you are paying.
If you travel often then you maye be better off with a Gold card for instance it has higher fees however if you use it mostly for business then these fees may be tax deductable.

“You didn’t pay in full” really?
Now things are a bit sticky, some cards will charge you from the date of purchase and some cards will charge you from the date of statement if you dont know when this is then it coudl have a dramatic effect on your interest. Remember you only get interest free days if you card is not outstanding, so make sure you clear your account.

Debit Cards
The smartest and safest way to book a flight, you can either have these draw on your own money therefore never overspending with money you do not have or you can apply for an overdraft the benefit is that debit cards often have very low monthly fees and you stil have the benefit of Visa and mastercard.

Understanding credit card revert rates
When looking at an offer to transfer your account balance from one credit card to another with a zero or low interest free period, make sure you are aware and understand fully the revert rate. The revert rate is the rate at which you are being charged interest once your grace period has expired, for example an offer may stipulate that you recieve free interest for twelve month’s on any transfers and at the end of this period the intest rate will “revert” to a defined rate maybe 12 or 15 percent beware of higher than current fees.

You also need to be aware of the interest rates on purchases, it’s no good transferring your low rate credit card balance for a no interest rate card with a higher purchase rate if you use your credit card for general purchases.

Credit card Payments
Low or no interest rate offerings from financial institutions can be very attractive, however you should always make sure you fully understand the repayments and do the maths. Always calculate your monthly fees comparitively! Otherwise you might find yourself in even deeper debt.

Financial institutions are offering you incentives like an interest free period on balance transfers to gain new business and ongoing relationships. Make sure you aren’t paying a higher rate for other purchases not just getting the value of no interest on your transfers.
When making repayments, why wait till you recieve you monthly account to pay your bill? generally interest is calculated by the day in which case the earlier you can pay the better and even if your interest is calculated by the month the same rule applies. If your interest is calculated by the month and you have paid say $200 before the end invoice period then you have saved on the interest of $200.

Always ask the question: “how is my interest calculated? if I pay my credit card ierlier in the month will I save money? You can bet on the answer will be yes! And if your interest is calculated by the month, what day does it fall on? and make sure you pay at least on the day before the interest is calculated.
Also ask what are the fees if I pay late? and always read the fine print, if you are unsure about something then make the call it could save you many $$$$$

Finding the right credit card for you can be a daunting tast, however given that there are so many offers out there it’s definately in your interest to look around.

If your debts are under $3000 or $5000 maybe a credit card with a transfer with 0% for 12 month’s could help you knock your debts on the head.

You’ll need to decide on some criteria, once you have a short list of credit features you are after you can start to shop around.
You need to decide wether you want a low rate or rewards card, or maybe a your a frequent flyer so a frequent flyer program would obviously have some credit advantages.