25 Ways Credit Cards Can Simplify Your Financial Life and Save You Money

It’s not uncommon to hear horror stories about ruined credit scores caused by credit card debt. After all, It’s important to remember that using credit cards comes with some risks, and you may be nervous if this is your first time using one. Most notably, falling into credit card debt.

However, taking advantage of rewards, points, and other perks can help you save or earn money when you shop carefully and use your credit card strategically. As long as you follow two simple rules, you can do it without going into debt: charge only what you can afford and pay off your balance monthly.

Moreover, credit cards can simplify your financial life and even save you money.

1. Sign-up bonus.

New credit cards often come with a bonus offer. If the applicant has good or excellent credit, they will often be approved for credit cards that offer bonuses worth $150 or more (sometimes much more) in exchange for spending a certain amount in the first few months of opening the account (anywhere from $500 to several thousands of dollars).

Some cards offer bonus rewards points or miles that can be redeemed for travel, merchandise, merchandise gift cards, statement credits, or checks.

As opposed to this, a standard debit card that comes with a checking account generally does not offer an initial bonus or ongoing rewards opportunities.

2. Reduce interest by transferring balances.

Do you carry a balance on a high-interest credit card? A lower-interest credit card may help you save hundreds of dollars if you wish to transfer the balance.

Balance transfer offers with 0% APR allow you to pay off your balance without accruing interest. A $3,000 balance at 17% can be moved to a 12-month credit card with 0% APR for almost $400 in savings.

It is important to make sure you will be able to pay off your balance within the introductory period so that it will fall to zero. As a result, you will still pay a considerable amount of interest, which will lead to a loss of money.

3. Save with 0% APR offers on big-ticket items.

In relation to 0% APRs, if you are able to access a limited-time 0% APR credit card offer, you may be able to take advantage of this offer to pay for a larger purchase while not depleting the household budget that you depend on for important expenses such as housing, bills, and everyday life. You may find it useful to finance a more expensive purchase with a 0% APR offer that lasts between six and twelve months. This could be particularly helpful in cases of emergencies, like replacing a washer or repairing a flat tire.

As The Balance points out, “If you have a big-ticket item to purchase—new furniture, a medical procedure, or a vacation—using a credit card with a 0% APR will let you break up the purchase into multiple payments without having to pay interest.”

Overall, if you can repay the money by the time your 0% APR offer expires, this is a great option for facilitating larger expenses without negatively affecting your family’s budget.

4. Tracks expenses automatically.

Keeping track of every purchase you make can help you stay on budget, according to personal finance experts. The downside is that writing down every item you purchase is tedious, and you may forget to do so.

Credit cards make tracking your spending easier when you buy everyday items with them. To see how much you’re spending and what you’re spending it on, log in to your online account or review your statement each month. It also saves you time because the credit card company takes care of recording expenses for you, so you don’t have to worry about forgetting.

Moreover, you can see how closely you adhere to your budget and where there is room for improvement with an accurate list of expenses. As a result, you could adjust your spending habits and budget accordingly, if necessary, in order to save money.

Suppose, for example, you log into your account and see that you’ve already spent the bulk of your grocery budget for the month, but there are still two weeks left. Your budget will require some adjustments if you wish to stay on track.

5. Earn rewards for everyday purchases.

It’s always nice to get free stuff, isn’t it? You can achieve that with rewards credit cards.

Spending on everyday purchases with rewards credit cards gives you the opportunity to earn miles, points, or cash back on your purchases. Rewards can then be used to cover trip costs or to purchase merchandise, goods, or services.

Essentially, credit cards can help you get free items and experiences when you purchase groceries, gas, or other necessities.

However, the credit card interest you owe will likely exceed the value of the rewards you earn if you don’t pay off the card promptly and in full. Your credit score could also be damaged rather than improved. So it’s crucial to remember that using your cards wisely can improve your life, but only if you’re ready to make the most of them.

6. Your credit score can be improved by using credit cards.

In virtually every aspect of your life, your credit score plays a role. For example, you will probably need good credit to be approved for an apartment lease. Credit is similarly necessary to qualify for mortgage loans, auto loans, or even cell phone or utility connections without making a large deposit.

The bottom line is that a good credit score can make a lot of other transactions much cheaper.

Furthermore, you can apply for them quickly, and there are cards that are easy to get approved for people who are building credit. But, for you to start building a positive credit record, all you need to do is pay your bills on time and keep your credit card balance low relative to the amount of credit available.

7. Cash isn’t always king.

In addition to your personal safety, carrying cash is risky. When lost or stolen, cash is notoriously difficult to locate. It can also slow down in-person transactions because you must count out the correct amount of cash and coins.

Additionally, cash-only consumers also face unique inconveniences, particularly in terms of getting cash when needed. Even though there are thousands of ATMs in the US, they are never easily accessible when you need them. There can be steep fees if you find one.

Besides the fees, banks usually limit ATM withdrawals to a few hundred dollars per day, making it impossible to get more than that. To get more than that, you’ll have to visit your nearest bank branch, which can be even more frustrating than finding the ATM. Also, if it’s a holiday or past business hours, you might be out of luck.

8. Safer than debit cards.

There is also a risk associated with debit cards. Fraudulent use of your credit card damages the issuer of your card. The money you lose when your debit card is misused comes out of your bank account.

Additionally, the Federal Trade Commission reports that consumers lost nearly $8.8 billion to fraud in 2022, an increase of more than 30 percent from 2021.

As long as you report the fraud promptly, you should eventually receive your money back. Before things get sorted out, it could take a while. Generally, bank fraud investigations take 45 days to complete. There may be issues covering your bills during that time, including bounced checks and automated payments.

9. You don’t need car rental insurance.

The cost of your rental can increase every day if you use the car rental agency’s rental coverage. If you use the right credit card, you may not need the extra insurance.

If you pay with your credit card and decline the company’s coverage, most major credit cards provide car rental insurance. Your rental car will be cheaper when you do this every time. Plus, it’s one less expense you have to pay.

10. Travel insurance is not necessary.

Before you leave, it’s often wise to get travel insurance if you’re hitting the road. It is possible to protect yourself against emergencies and interruptions during a trip with travel insurance.

There is, however, a cost associated with these insurance policies. It is estimated that travel insurance can cost between 4% and 8% of the total cost of the trip. For example, if you were to take a vacation worth $3,000, you would have to pay $240 just for insurance.

Several credit cards, however, offer free travel insurance when you book your trip with the card. Common coverages offered by credit cards include:

• Cancellation/interruption insurance for trips. You will be reimbursed for a portion of your travel arrangements if your trip is canceled before departure or interrupted due to covered reasons – such as jury duty or injury.
• Insurance coverage for baggage delays and losses. You’ll receive a daily stipend if your luggage is lost or delayed by the carrier. Expenses such as clothing and toiletries will be covered.
• Travel accident insurance. Accidental death or dismemberment during a trip is covered by travel accident insurance.

11. Free checked bags.

It may be possible to avoid luggage fees if you use a travel credit card. You could potentially save more than $100 per roundtrip by checking one bag free per person with some of the best travel credit cards.

The free checked bag means you won’t have to worry about packing everything into your carry-on, and you’ll have plenty of space for souvenirs as well.

12. No foreign transaction fees.

Are you traveling abroad? In this case, you should pay attention to your credit card’s foreign transaction fee. A foreign transaction fee of up to 3% is charged by some cards.

If you would like to avoid foreign transaction fees, look for credit cards that do not charge them. You could save hundreds of dollars by using a card with 0% foreign transaction fees.

13. Hotel stays are free.

Every year you’re a card member, you’ll get free nights at a hotel, among other rewards and benefits. Hotels, including luxury resorts, allow you to redeem your reward.

You may be able to get a $500 or more perk depending on the card and where you decide to stay.

It is possible to have access to hotel upgrades even if you aren’t able to snag for free. Some credit cards offer complimentary early check-in and late check-out, as well as free breakfast for two on each day of your stay.

14. Free food at the airport.

Priority Pass, a program that gives free entry to airport lounges around the world, is available on many credit cards.

There is a less-known benefit of Priority Pass, which is restaurant credits. There are dozens of U.S. airport restaurants where you can get a free meal and get a credit of $28 per person.

15. Passes for airline companions.

Using your credit card may allow you to secure free or discounted airfare for a friend or relative. You can get round-trip airfare for your friend with a companion pass offered by some credit card companies.

16. Access to exclusive events.

Special events and promotions are often offered to card members by credit card companies. Getting free museum or theater passes, discounts on concert tickets, or even celebrity meet-and-greets is possible.

17. Dine out and get benefits.

You can also save money by looking for a credit card that reduces your dining expenses. In many families, dining out is a part of daily life, especially for those who cannot imagine cooking. In some families, eating at a restaurant is reserved for special occasions or date nights only. No matter what, using a credit card with a dining rewards package is a great way to save money while eating out.

According to Nerdwallet, “If dining out is a way of life for you and your family, the U.S. Bank Altitude® Go Visa Signature® Card offers a tantalizing combo: massive rewards on dining purchases with an annual fee of $0.”

Of course, that’s just one of many dining rewards credit cards available. You should compare dining rewards credit cards if you enjoy eating out frequently or occasionally.

18. Get a gift card when you redeem the cashback.

There are many credit cards that offer bonus gift cards when you use them with retailers. Redeem your cashback for one of these gift cards to maximize your rewards.

A $20 cash reward can be redeemed for a $25 gift card, for example. The $5 will be credited to your account if you choose retailers that you already shop at.

19. Gas and grocery store benefits.

It’s no secret that grocery prices and gas prices have increased dramatically over the last two years. In these challenging economic times, every dollar you can save on these expenses can go a long way toward helping your family manage household finances. It makes sense to look for credit card offers that offer generous rewards for grocery and gas purchases.

Nerdwallet reports that the Blue Cash Preferred® Card from American Express, offers “6% cash back at U.S. supermarkets on up to $6,000 a year in spending (then 1%). It also earns 3% cash back at U.S. gas stations and transit, another category where families tend to drop a lot of dough each month. It also offers 6% cash back on select U.S. streaming subscriptions. Non-bonus-category spending earns 1% back.”

20. Other types of consumer protection are available.

Other types of protection are also available with some credit cards. You might be reimbursed if the price of an item drops in the days or weeks after you buy it, for example, if your card offers price protection.

Additionally, extended warranties on electronics can help you avoid expensive repair or replacement costs. The cost of these protection plans is often high.

Thankfully, the extended warranty offered by some credit cards is automatically included with electronics purchases. Learn whether your credit card offers this coverage and how to take advantage of it before you shop.

21. You can use your credit card to pay your taxes.

Did you know that you can pay your federal taxes with your credit card? It’s true.

But, why would you do this?

Well, according to Due Founder and CEO John Rampton, there are a “plethora benefits of paying your federal taxes using a credit card,” such as:

• Get more credit card rewards. You can convert reward points into cash or use them to buy other items. With your tax amount being substantial, you may be eligible for a sizable reward.
• Take advantage of a generous welcome bonus. It is likely that you would pay more tax through the card since you would be paying a substantial amount through it. By exchanging points, you can earn hundreds of dollars.
• Meet your credit card milestones. You can reach your spending threshold by paying your federal tax with a credit card. The bonus and regular rewards you earn can still be used to qualify for more benefits even after you earn them.
• Get a loan for more than a year. You will not have to pay interest for more than a year if you choose the right credit card.

22. Ensures the honesty of vendors.

Imagine you hire a tile setter to lay your entryway floor. Over the weekend, workers cut, measured, grouted, and placed the tiles and spacers. You are then billed $5,000 for their work.

Using your savings account, you write a check. Then 72 hours later, the tiles start shifting and the grout is still wet?

The contractor still has your money if you take up the issue with your state licensing board. If possible, use your credit card to purchase a big-ticket item like this. Issuers have an incentive to discourage fraud among their vendors, and they have mechanisms for resolving problems if they arise. You can also get help finding a new contractor if you dispute the charge because the card issuer withholds the funds from the tile setter if you dispute the charge.

23. Make use of the Discount Mall.

The majority of credit card companies offer regular discounts to cardholders through a “discount mall,” which is a group of national retailers they partner with.

The discount mall provided by your credit card issuer can save you money on dining, movie tickets, flowers, and more. Most credit card companies have a list of these stores, along with how much you can save.

24. There’s a grace period.

Using a debit card means your money is gone immediately. If you use a credit card to make a purchase, your money will remain in your checking account until the bill is paid.

Holding onto your funds can be beneficial in two ways.

In the first place, the time value of money (even if it is infinitesimal) will help you save money. If you delay eventual payment, your purchase will be a little bit cheaper. Furthermore, by paying with a credit card rather than a debit card, cash, or check, your money will stay in your bank account for a longer period of time. During the grace period, if you pay your credit card with an interest-bearing checking account, you will earn money. Over time, the extra cash will add up to a significant sum.

As a second benefit, you are not required to monitor your bank account balance as closely when you consistently use a credit card.

25. Credit cards are universally accepted.

Debit cards can be difficult to use for certain purchases. A credit card will almost certainly make renting a car or staying in a hotel room easier. Customers who use a credit card to pay for a rental car or hotel room can easily be charged for any damage to their property.

Additionally, the merchant doesn’t know the final amount of your transaction unless you have prepaid for your rental or hotel stay. To protect themselves from unanticipated charges, the merchant should block out certain amounts of your credit line.

You may be forced to put a hold of several hundred dollars on your account if you wish to pay with a debit card.

Additionally, merchants may refuse to accept your debit card when traveling abroad, even if it’s branded with the logo of a major bank.

FAQs

What is a credit card?

In general, a credit card is a form of payment, usually made of plastic or metal, which allows you to borrow credit from a bank. In addition to their ability to help you build credit, earn rewards, and manage debt, credit cards are also powerful spending tools.

How do credit cards work?

With a credit card, you can access revolving credit. You can charge up to $6,000 on a credit card with a $6,000 credit limit, for example, without incurring any fees. As you pay down balances on a card, you gain access to its credit limit.

Each month, you must make a minimum payment by a certain deadline. Failure to do so will result in fees and penalties, as well as damage to your credit rating.

The interest you pay on any credit card balance carried forward from one month to the next will depend on how much you owe. It is also possible to negatively affect your credit score by carrying a high credit card balance. The best way to avoid these problems is to pay off your charges every month in full.

Who issues credit cards?

In addition to large financial institutions and small banks, credit unions also issue credit cards. Among the top credit card issuers are American Express, Discover, Bank of America, Chase, Capital One, Citi, and Wells Fargo, according to the latest J.D. Power U.S. Credit Card Satisfaction Survey.

A co-branded credit card is one offered by a retailer or service provider and a financial institution that partners with the retailer or service provider.

Which credit card has the best rewards?

Depending on your spending habits and the type of rewards you prefer, you can determine what rewards card is best for you. Using some cards, such as Chase Sapphire Preferred, can earn you more cash back on general spending. Travel rewards cards, such as the Bank of America Travel Rewards Card, are best suited for frequent travelers.

How do you get the most out of credit card rewards?

Having multiple types of rewards cards can help you get the most out of credit card rewards. Depending on your spending habits, combine an all-around cash-back card with a travel rewards card.

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