3 Credit Card Tricks That Keep More Money In Your Pocket
Most adults across the nation have at least one credit card and use that credit card to make purchases on a monthly basis. Credit card companies love the fact that these people are using are using their credit cards more often because it gives the company more chances to try to extract more money from these consumers by charging higher interest rates and fees for using the cards. There are some ways for a consumer to beat the credit card companies at their own game and reduce the amount of money earned by the company in credit card fees.
Trick 1 – Pay Your Credit Card Bill Early
Making a payment on your credit card late gives the credit card company numerous opportunities to make money off of you. The first charge that they will levy against your account will be a late payment charge, which could be as high as $39 per occurrence, even if the payment is only a few hours late. If the person is close to their credit limit and this late payment penalty fee pushes them over the limit for the card, the credit card company will use this as a reason to charge the account an over-limit fee, which could add another $39 charge to the balance of the account.
If this was not punishment enough, many credit card companies use the fact that you have missed a payment due date to skyrocket the interest rate for the card to the highest allowable limit, which could be as much as 30% for some cards. In order to avoid all of these problems, it is best to make a payment on your credit card as soon as possible after you have received your bill to make sure that your payment will not be received late. Some credit card companies will even allow you to pay your bill online, so the payment will post to your account no later than the next business day and you can print out a receipt saying that the transaction has been processed.
Trick 2 – Pay Your Credit Card Off In Full Every Month
Credit card companies are required to give each account a grace period for paying off the charges before they can start charging a finance charge to the account. This grace period is typically between 25 and 30 days, meaning that if you can pay off the amount that you have charged to the credit card in this amount of time, then you will not be charged the extra finance charge for borrowing the money. If you are able to pay off your credit card each month, make the full payment and avoid paying extra money to the credit card company.
Trick 3 – Use Cash Whenever Possible
Credit card companies have started to offer rewards points and other perks to people that use their credit cards at everyday places, such as gas stations, grocery stores, and fast food restaurants, to convince more people to use their cards more often so that the credit card company can charge them more fees. What many people do not realize is that the credit card company is making much more money off of these individuals in fees than the people are receiving back as perks. It is better to use the credit card as little as possible and to pay cash for small everyday purchases to reduce the amount of money that you are paying to the credit card company each month.
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There is a nearly foolproof way to keep from ever getting hit with a late payment penalty or interest rate hike on a card you use for monthly spending:
You set up automatic payment from your checking account to the credit card account for double the minimum payment on your card for a typical month’s spending, or $50, whichever is more. (If you normally spend $500 in a month, the minimum payment is $10. double that is $20. In practice, I just send in $50. That way, I know that as long as I spend less than $2500 ($50 is 2% of $2500) , there’s no way I can possibly get penalized for late payment, even if I flake out and stop paying my bills for six months. That’s becuase as my bank always sends in the $50 on time, even if I forget to pay the rest.
Then, I use google calendar to send me a reminder for the credit card on the day that the billing cycle ends. It says “WAMU billing cycle ends 24th of month; payment due 17th of next month. ”
I pay all my credit cards two days to a week after the billing cycle ends. No waiting for the week before the due date–pay it as soon as they bill me. And this way, I know that the $50 goes out 2 days after the billing cycle ends, and there’s no way after that for me to be “late” and penalized.
Try It! You’ll like it!