Having a credit card is handy, just like the following tips to help you save money.
- Pay your balance in full every month
You can avoid costly interest charges by paying your balance in full every month.
- Don't be late making your payments
You can avoid costly late fees by making your payments before the payment due date specified on your statement.
- Know your limit, and stay within it
All credit cards have a limit, and if you go over yours you will be charged what is called an overlimit fee. This overlimit fee varies by credit card but often ranges from $20 to $35.
- Carrying a balance? Make early payments
If you're carrying over a balance month to month, don't wait until your payment due date to put some money down on your card. If you have it, put it on your card as soon as possible to minimize how much you end up paying in interest.
- Always carry a balance? Consider a low interest rate card
Even though low interest rate credit cards often come with an annual fee, if you typically carry a balance you could end up saving money with a low rate card. The lower rate, in some cases, might save you more money than the cost of the annual fee. It's an option worth exploring if you regularly carry a balance.
- Avoid taking cash advances
Even though a cash advance may be easy and convenient, you are paying a premium for this service. Not only will you be charged interest right away (there is no interest-free period like some purchases) but often you will also be charged a cash advance fee. This fee can be a flat rate fee (like $5.00), a percentage of the amount you withdrew or a combination of the two.
- Avoid using convenience cheques (AKA cash advances)
Most of the time, convenience cheques (issued by the credit card company) are for all intents and purposes treated the same as a cash advance.
- Avoid charging cash-equivalent transactions
Unless you know that your credit card company will treat it as a purchase (and not like a cash advance), avoid paying for wire transfers, money orders, traveller's cheques or gaming activities (i.e. betting, wagers, lottery tickets, casino chips) with your credit card.
- Keep your credit card active
Do you want a credit card just in case? Don't forget to use it every once in a while to keep it active. With some credit cards you could be charged an account maintenance fee for cards that become inactive. Usually you are given a year before your account is deemed dormant.
- Pick the right credit card
Interest rates vary between cards. But did you know that interest rates may also vary within one card? You may be charged one rate for purchases, one for cash advances and another for the balance you transferred onto your card. That's why it's important to know in advance how you will use your credit card. You will save money when you get a credit card that offers you the best interest rate for how you plan to use it.
Shop around for a credit card that suits your needs, and save money at the same time. Compare credit card features, benefits and rewards easily online today at KANETIX.ca.
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