Save money with your credit card

Use your credit card with care and you could save on both interest and the price you pay for purchases. These saving tips should help.

Interest free plans on your credit card

If you have a credit card offering an interest-free period, you could enjoy all the benefits of buying now and paying later. However, it’s important to pay off your full balance within the interest free period, otherwise you’ll pay interest.

For everyday spend, there is also the interest-free period which is usually between 25 and 55 days. To receive this interest free period, you must pay the full closing balance on your statement every month.

To make the most of this feature you’ll need to keep track of both your spending and when your payments are due. And, with all credit cards, you’ll need to at least pay your minimum monthly payment by the due date.

Use your credit card to snap up a bargain

One of the smartest ways to use your credit card is to take advantage of sales or special offers to save money on something you need. For example, if you were waiting till pay day to buy a new clothes dryer but see one on offer for half price, it makes sense to put the purchase on your card then pay the balance off in full as soon as your salary is in your account. This can work particularly well if you’re also taking advantage of an interest-free period.

This strategy won’t work quite so well if the offer is cash only. Many credit card providers have a higher interest rate for cash advances and also start charging interest from the day you withdraw the cash. You could still save money by picking up a cash bargain, but it’s important to take into account the extra interest you’ll pay and pay the balance in full by the due date.

Credit cards with Rewards

As the name suggests, Rewards Programs reward you for using your credit card. The incentives range from free flights and upgrades, shopping vouchers, tickets to sporting events or concerts, and even cashback. If you’re comfortable using a credit card for most or all of your purchases, and you clear your balance every month, it may make sense to choose one that gives something back.

Clearing your balance is important because these credit cards are generally at the higher end of the interest-rate spectrum; if you do end up paying interest, it could easily offset any rewards.

If you decide to go ahead, you need to be realistic about the amount you’re likely to spend on the card each year, how many reward points you would earn and whether this will outweigh the annual fee. With so many different programs on offer it’s important to find a close match for both your spending pattern and your lifestyle.