Far too often, credit card consumers let their purchasing power rest in the hands of creditors. But there are open secrets that can help you get the most from your card, whether you’re just charging your supermarket purchases or you’re about to sell ipod to buy new electronics. Here’s how to take advantage of your credit card before it takes advantage of you.
Search for a low interest rate. Many cards offer a promotional rate of zero percent for the first year, which can be an advantage if you’re planning to make a big purchase soon. But beware this gimmick, because your interest could shoot up to an unreasonable rate after that promotional period is over. Determining what would be a good rate for your depends on your credit history and the type of debt that you currently have. As a general rule, however, your interest rate should not go any higher than 20 percent, even if your credit record has some blemishes.
Use your card as a transactor. Work to pay off any charges that you have incurred before they accrue interest, so that you can enjoy perks like rewards and a good credit score without having to fork over money in interest charges. And if you plan large purchases just right–that is, you charge them to your card immediately after your payment is due–you’ll have nearly sixty days of interest-free finances once you incorporate the “grace period” that most cards offer.
Take advantage of rewards. Don’t underestimate the financial value of rewards like cash back on everyday purchases (such as the supermarket or filling station). Even if it’s cents on the dollar, it could be the foundation of a solid savings plan for you. And always inquire into any travel advantages your card may have before you plan to take a vacation.
Read the fine print. One useful tool that all credit cards provide is the summary box written on the back of each paper statement; this box is also available with the initial credit card offer. It outlines rules for the annual percentage rate, the interest-free periods and what your interest rate will be if you make a late payment or miss a payment. Understanding these guidelines will give you a good idea of when you should make important purchases and the penalties you’ll face if you break the agreement.
Never stop negotiating. After you’ve found a good interest rate, signed on for a credit card and gotten into the routine of charging and paying, it’s easy to become complacent with your credit. However, if you have paid all your bills on time and been an exemplary cardholder, it sometimes pays off to call your company after a year or two and ask what special offers you qualify for. You could end up getting a better cashback deal or a lower interest rate. This consistent negotiating is the real key to unlocking the power behind your card.