You need to understand how credit cards work. For every credit card, you need to pay a certain amount on a specific date depending upon your usage for a month. For example: If you have a certain amount to be paid, you can pay full and you won’t be charged interest. So, if you purchase something on the 1st, and pay full on the 20th next month, you get 50 days of interest-free period! But, if you don’t pay full you will be charged some interest from your outstanding balance.
What Is The Best Way To Use Your Credit Card?
- You definitely should “time” your expenditure. You might be able to get an interest-free “loan” for nearly 2 months! Save your interest expense and don’t make the bank richer.
- You should pay back together, or else, as the balance piles up and become bigger, it will be unmanageable. Anyone financially sound will tell you to settle fully every month. Agreed, but do not forget to time your payment.
- Using your credit card for your business if you have a fresh product is acceptable. Remember point #1. You’ll have an interest-free period. It’s easier to obtain a CC vs Business loan. So, what worked for me was, I bought stocks using CC and made sure I sell out and cash everything before the due date of the card. This is a smart practice for those who want to try their hand in business but are not strong financially. However, please use this trick with caution.
- Have you heard of the“0% installment” concept? You credit $6,000 and pay it back over 6, 12, 24 or 36 months! Some people may have to pay a fee but some don’t. This concept is able to give you extra time in clearing your balance. I used this to purchase my workout equipment costing $1,000+. I made an instalment of over 12 months without any interest. But beware, the bank might “block” your limit. If your limit is approximately $2,000, you’ll be left with only $1,000 to spend.
- Anyone who’s interested in balance transfer? This is an amazing way to save on your interest. For example, you’re charged with 18% interest, you can do a balance transfer and pay just 6% per annum! All you have to do is Bank A buy your “balance” e.g. $3,000. Pay that in full, but now you have to pay back 6% per annum. The exciting segment is that they will re-evaluate your balance so that you just pay a fixed amount monthly.
- Buy highly valued things using credit cards as most of them will get you installments. Say you use your smartphone to make money, after swiping your card with $600 and paying 6 months installment ($100). Within the next 6 months, the capital that you made should have surpassed the initial $600. You now have a phone and a literal “money mint”. That is better than saving $100 for 6 months and then buying them 6 months later.
- When you’re using CC vs Cash, you will get some exclusive offers and discounts. You will earn points which can be exchanged with things. It is also safer than bringing cash around. Even if it’s stolen, it can be retrieved.You can use them for online bookings & shoppings, and never forget about the airport lounge. You won’t get that if you use cash.
Image Credit: NewYork Times