How to Make Credit Cards Work for You

Credit cards have certainly gotten a bad rap: They make it easy to get into debt and difficult to get out of it if you don’t manage them properly. However, you can absolutely learn how to make credit cards work for you. In fact, you can actually benefit from using credit cards – and perhaps even avoid debt altogether. Here’s how:

Find a credit card that offers good rewards.

A lot of terrific rewards credit cards are out there. These cards give rewards for every purchase. These rewards can be monetary (cash back), or they can include a variety of perks from frequent flyer miles, to cash towards a new car purchase, and so forth.

Pay credit cards off every month.

One of the easiest ways to make credit cards work for you is simply to use them and then pay them off every month. You get into trouble with debt only if you fail to pay them off in time. Use credit cards effectively to maximize rewards and eliminate interest charges by paying them off every month. It’s great for your credit history, and you’ll get some nice perks too.

Make rewards add up faster.

If you have the discipline to do it, to make credit cards work REALLY effectively, simply use your credit cards as you would your checking account/debit card. Pay your bills and make other purchases, then pay those balances off every month. When you do this, those rewards stack up quickly, and you still have no interest charges to worry about.

Be careful, though, because you absolutely must pay balances in full every month to make it worth the rewards. When you buy something with a credit card, “deduct” the same amount from your checking or savings account, marking that money as “already spent.” When the credit card bill(s) come due, you can pay them easily because you’ve already set aside the exact amount of money in your checking or savings account to pay the bill(s).

Find a lower/no interest credit card if you must carry a balance.

If you must carry a balance on your credit card, look for a lower interest credit card. Many cards offer 0% introductory rates for at least six months. The Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009 guarantees your introductory rate for at least six months. If you opt for a balance transfer to take advantage of a 0% introductory rate, make sure you DON’T close the old card once you complete the transfer; this could negatively affect your credit score.

Use credit cards to get extended warranties – for free.

Most money-saving experts counsel against getting extended warranties on appliances and other products, and consider them a waste of money, since it’s often cheaper to pay for repairs or buy a new (and upgraded) item once the initial manufacturer’s warranty expires. However, if you must have an extended warranty, don’t buy it. Instead, check with your credit card company before making that major purchase to see if that coverage is offered free of charge. Many major credit card companies offer this coverage on specific types of cards. Use the right card, and you’ll be able to tell the salesperson who wants to sell you that extended warranty that you’re already covered.

Your credit card provides protection against loss, theft, and breakage for things you buy, and offers purchase protection, too.

Paying with a qualifying credit card covers you against theft, loss protection, or breakage of the purchased item(s). Check with the credit card company before you make a major purchase to be certain you’re covered. If you are, there’s no need to buy additional protection.

Rent a car with a credit card that automatically covers rental insurance and roadside assistance.
Another significant way to benefit from your credit card is to rent your next car with a credit card that covers rental insurance for free. Car rental companies make a killing on that rental insurance and the pressure to buy can be very high. But you can say “no” to it with a cool, clear head when you know you’re already covered.

Look for special discounts.

When you shop with your credit cards, you probably already know how to look for discounts and deals at the retailers you frequent. Additionally, check with your credit card company and payment network to see what other discounts are available. This is a relatively little-known perk, but it can sneak in some significant savings.

Before you start shopping, go to the website of each credit card company that you use and register. That gives you access to special deals and promotions related to that card. Check periodically (such as once a month) to see what new deals may be underway, and what may have changed. If you still opt for paper billing, read the inserts that come with your credit card for valuable information on new purchase or special deals that are available.

Kristen Gramigna is Chief Marketing Officer for BluePay, a credit card processing solutions firm, and also serves on its Board of Directors. She has more than 15 years experience in the bankcard industry in direct sales, sales management and marketing.

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