Credit Card Hacks that Could Save You Money

Using a credit card is one of those things in life that is relatively self-explanatory: open wallet, insert card.

But if you want to explore the territory of more-sophisticated credit card users, there are some tips and tricks that could actually save you money while using credit.

Taking advantage of these “hacks” requires a few things: a high-enough score to access low-interest-rate offers (0% interest rates are even offered to some consumers with top credit scores) from credit card companies, and, for some of these tips, a high-interest savings account, money market or similar interest-bearing account.

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Make Money with Low-Interest-Rate Offers

Deferring payments by using a low- or zero-percent APR card while simultaneously saving money in a higher-interest-bearing savings account could actually be a way to make money. For example, if you finance a $500 purchase at 0% APR, but are simultaneously saving $500 or more in a high-yield savings account, the money your savings earns in interest during the card’s promotional period could go toward paying the card’s balance right before standard APR kicks in. Note that you will still need to be making the minimum monthly payment on your credit card, even if it is a zero-percent card. Read on to see what this looks like in practice.

Use a Low-Interest Card for Big Expenses

If you’ve got a major purchase coming up, such as when you need to buy furniture, appliances or other items to furnish a new house, you can apply for and use a low- or 0% APR card exclusively for these purchases. This card then functions as the equivalent of a low-interest-rate “loan,” allowing you to defer or break up your payments and, in the meantime, earn interest on savings that could help you pay off the balance at the end of the term.

Extend Low Interest Rates with a Balance Transfer

Coming close to the end of that low-interest-rate offer period? Use a balance transfer offer with a low fee to extend the length of low-rate “loans” to another low-interest-rate card.1 Credit card balances on cards with high APRs can be transferred to and consolidated on a card with lower APR. Just be sure to read the fine print of the balance transfer, so that you’re aware of the terms.

Keep Track of New Credit Card Incentives

New incentives are continually coming up, from signing bonuses with frequent flier miles and rewards for spending in certain categories. It’s best to take advantage of cards that offer incentives aligned with your spending priorities.2 For some of these programs, you’ll need to sign up to take advantage of them, so be sure you are frequently visiting your credit card company’s website to see what offers are available. Negotiate with new or existing credit card companies for better incentives, such as a better APR or a sweeter signing bonus, by calling and speaking to a representative.3 Be polite, but be sure to mention any incentives you have been offered by competitors. The better your credit score, the more competitive your business will be for credit card companies.

Resources:

1. http://www.nerdwallet.com/blog/balance-transfer-credit-cards/balance-transfer-credit-cards-pay-off-0-percent

2. http://www.creditcards.com/credit-card-news/help/7-ways-to-get-most-from-rewards-credit-cards-6000.php

3. http://www.nerdwallet.com/blog/tips/negotiate-lower-credit-card-interest-rate

Legal Disclaimer: The articles and information provided herein are for informational purposes only and are not intended as a substitute for professional advice. 

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