Credit cards can be your best friend or worst enemy; it all depends on how you use them. Getting the most out of your credit card is often counter-intuitive or requires you to be aware of features that aren’t regularly advertised. This list of credit card hacks will provide you with the info you need to make the most of your credit cards.
1. Price Protection is a Geeks Best Friend – Don’t you hate it when you drop $600 on an iPhone or your now obsolete HD DVD player and it drops in price by a couple hundred bucks a month or two after you buy it? Many credit cards offer a price protection program which will refund you the difference when you purchase an item with the card and you find a better price within 30-90 days.
2. Read the Terms and Conditions – They are not nearly as long as you may think and fairly easy to read. The card companies are not always forthcoming with the details in their advertising and this is where you’ll find the hidden fees and rate information.
3. Balance Transfers Aren’t Always Worth It – Especially when your plan is to pay off the card anyways. There’s almost always a balance transfer fee and that fee, plus the interest accrued from it delaying the repayment of your card, often ends up being more expensive than just keeping the higher rate card and paying it off.
4. Choose Longer Intro Period over Lower Fixed Rate with Balance Transfers – This may seem counter-intuitive, but having a 6 to 18 month jump on paying off your debt, interest free usually ends up being a better deal than getting a lower fixed rate when you plan on paying off the debt. For more information click here.
5. Get Cards That Offers Rewards for NOT Using Them – Believe it or not they exist. Many will offer you free airline miles for just signing up or for making a single purchase. The Citi Driver’s Edge card offers you rewards just for driving your card; enough for free oil changes.
6. Don’t Carry A Balance – Credit cards are rarely the best source for financing a purchase long term. Most likely you can open a line of credit with your bank that offers much better terms. You can still use the card for the convenience but if you need to carry over the balance from month to month, transfer it to this line of credit.
7. Get Rewards You’ll Actually Use – If you travel a lot, an airline or hotel rewards card may be the best choice for you. If you don’t, don’t plan a trip around the rewards. Find a card with rewards you’ll use anyways like gas cards, saving for college, or funding a retirement account.
8. Cash Back is King – As we mentioned in a previous article, almost all credit card rewards are essentially the same, 1% cash back in one form or another. Knowing this, why would you want to deal with blackout dates, restrictions, expirations, etc. Just get the cash back card and use that cash to pay for whatever you want.
9. Take the Purchase Protection, Leave the Extended Warranty – Many cards offer purchase protection for items you buy with them, which not only act as an extended warranty, but will also often cover the item if you damage it or it’s stolen.
10. Have More Than One Card – If you insist on carrying a balance and for whatever reason are previous advice on opening a line of credit won’t work for you, then at least have a separate card for this. Ignore all the rewards and similar factors and just get the lowest rate you can. Use your rewards card for making everyday purchases and use this low interest card to cover expenses you plan on financing.
11. Track Your Expenses – Most banks offer the same reporting on credit card accounts as on checking accounts. This includes the ability download to Quicken or MS Money. Don’t just log one big expenses for ‘credit cards’ on your budget, download and log your entertainment, dining out and other expenses as you would if it was your checking account.
12. Beware of ‘Poor Credit’ Cards – There are definitely some legit credit cards for those with poor credit, but there’s also no shortage of absolutely horrible ones. Some charge you so much in hidden fees upon opening the account that it adds up to near the available amount of credit you have on the card! Sadly that is no exaggeration. You should always read the terms and conditions on the cards, but this is especially true with those designed for people with poor credit.
13. Use a Separate Card for Business Expenses – No matter how small your business is. If you run an internet business or any other kind of small business odds are you use a credit card or at least debit card for most of your expenses anyways. Even small businesses (or with some cards, individuals) can qualify for a business credit card. Get one and use it and come tax time, those deductions will be a snap!
14. Closing Credit Cards Doesn’t Always Help Your Credit Score – By closing a card that is paid off, you end up raising the ratio of your used vs available credit which can often hurt your credit score. If you have an excessive amount of cards that you want to close out, that’s fine, but think twice if your reasoning for doing it is to improve your credit score.
15. Pay Off Your Highest Balance Card First – When getting out of debt you may be tempted to pay off your smallest debt first. While this give you a sense of accomplishment sooner, the best technique is to pay off debt with highest interest rate first, which is usually a credit card.
16. Everything Is Negotiable – If you’re a good customer, or even a mediocre one, odds are you can get out of paying late fees or get your bank to lower your interest rate just by asking. Here’s a video explaining how.
17. Beware of Two-Cycle Billing – The amount of interest you pay is based on your average daily balance. Many card companies have come up with a new method of calculating your average daily balance by considering not only this month’s average balance but also the previous months. The problem with this is that amount is usually higher when you’re in the process of paying off your debt making it even harder to do so.
18. Sign the Back of Your Card – Many people refuse to do this thinking they want the person accepting the card to be forced to check ID. The only problem with that, is if your card is ever stolen, the thief will have no problem signing the back of the card for you and will now have a perfect signature match. Not that most people really check the signature anyways, but don’t make it even easier on the thief. If nothing else, write “Please Check ID” in the signature box.
19. Personalize Your Card – You might as well have a card that reflects your personality. Most banks will let you personalize your card in a number of ways such as putting your team logo on it, your photo, or even provide your own card art. Take advantage of this, it’ll give you a card you love and make a great conversation piece.
20. Have a Discover Card – Have you ever noticed that although many merchants don’t accept Discover, at certain government agencies and wholesale clubs, the only accepted credit card is Discover? The reasoning behind this is somewhat complicated, but if you hate writing checks as much as I do, do yourself a favor and have at least one Discover card.
21. Never Pay the Minimum Payment – No list of credit card advice would be complete without the classic advice to never pay the minimum payment on a card. I’ll spare you the math but in short by doing so you’ll usually end up paying somewhere in the ballpark of three times what you borrowed and end up paying it over twenty or so years.
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