Credit Card Comparison

Tips and Tricks for Using Credit Cards

Although some aspects of the media would like to convince the general public that credit cards are nothing but bad news, the truth is life without one can sometimes be difficult. Numerous websites and companies require a credit card for authentication purposes, as well as the fact that anything you buy with a credit card is protected by your credit card company. When used correctly, and in moderation, credit cards can be the most useful payment tool available to you.

The first, and perhaps most important, trick is to find a card that is applicable to you and your spending patterns. If you intend to use a card for one big purchase that you plan to pay off in stages, the best card is one with a low overall interest rate. Often, cards with low rates come with few enticing introductory offers – such as interest-free periods – but this becomes a benefit, as the long-term rate is lower. After all, there is little point having an interest-free period when you plan to be paying something off for a long time – interest is going to accrue, so it’s more important to get a rate that’s lower in the long run. For all these reasons, it is always best to compare credit cards before applying for one.

If, however, you use a card for every day purchases and can pay it off in full each month, the opposite is true. Go for a card that offers as many interest-free days as possible, which may make it possible to pay no interest at all. There are many cards available where the interest-free period is more than 40 days, which means if you do pay off the balance in full at the end of each month, you will accrue no interest at all. To ensure you get the best deal, carefully scrutinise the terms and conditions of any card you are considering applying for.

Secondly, a highly important part of using a credit card is to remember this: wherever possible, avoid the cash advance. Credit card companies make an obscene amount of money from cash advances, with some charging up to 27% interest on any cash withdrawals. If you need money for something when only cash will do, there are ways of obtaining the money you need from your credit card without paying a cash advance fee.

Using an online payment system like PayPal, send money to a trusted friend – or even yourself, using a different account – using your credit card as the source of funding. This will count as a purchase, so your normal interest rate will apply. When the money arrives in your online account, transfer it into your bank account. This process takes around five days, but on large amounts it will save you a fortune, as much as $270 on a $1000 transaction.

Finally, one of the most popular credit card tricks is known as ‘stooging‘. Hundreds of credit card companies offer introductory interest-free rates, designed to entice new customers. However, when the interest-free period has expired, the annual rate is usually quite high.

To get around this, find a card with a large interest-free period on balance transfers. Move your balance over to the card for the interest-free period, and then when that period is nearing an end, apply for another card with an introductory interest-free rate on balance transfers. Again, transfer the balance across from your first card. You can keep doing this for as long as different credit card companies accept you for new cards. Stooging can save you a great deal of money if you have a large balance that you are paying off month-by-month. Just remember to cancel each card before the interest-free period ends and move your balance in plenty of time. Credit card companies don’t like this, but it is perfectly legal.

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