Using credit cards to your advantage
Banks and financial institutions love customers using credit cards. It's a surefire way to generate revenue and ensure repayment. Most banks and FI's justify their high-percentage interest rates on high non-repayment and with limited information in the public arena as to these non-repayment amounts who can argue?
So the only way to beat banks and FI's is at their own game. Utilise the benefits of a credit card without being caught by the banks own attempts at taking your money from you.
- Never keep debt on the credit card for any longer than the fee-free period. Depending on which bank of FI you hold the card with will depend on this period of grace. It may be between 30 - 55 days. Using a credit card and then paying it off at the end of the fee-free period allows you to keep your cash in an account earning interest while you use the bank's money for your purchases.
- Depending on your needs, find a credit card without all the bells and whistles. For most people having frequent flyer or bonus reward points attached to the card can cost you more then 5-6%pa extra for the privilege. If you did the math on what those frequent flyer points were costing you, you might find that it would be cheaper to pay for your own flights.
- Try using only one card rather than multiple ones. It simplifies your life and allows a better handle on where your money is going. It also may also allow a better rate of interest with your bank or FI for greater debt limits.
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