5 Easy Ways To Save On Credit Card Interests and Fees
1. Never miss even one payment.
Mark the deadline for payment on your calendar. Late payment can hit you with an interest charges and fee on top of what the card issuer has charged you. If you have more than one cards and keeping track of your payments is a chore; you may consider consolidating them. If you send payment by post, do it early in case there are unforeseen delays. Other than unnecessarily paying for fees, you can get a “black mark” on the credit report. This might negatively impact your credit score and can cause interest rates on your future loans to go up.
2. Don’t take a cash advance.
You’re charged with interest from the first day you get a cash advance. At first, you’re charged with a processing fee. And then, you start paying interest on the cash advance. The interest rate on your cash advance might be higher than the regular interest rate on any normal purchases. Finally, your repayments go to paying off the remaining balances first before it is being offset against the cash advance, which can result in higher interest charges if you fail to pay off the balance completely.
3. Pay off your balance in full, each month.
If you can really afford it, then pay off credit debt balance in full each month. If you cannot afford it, then stop using the card. Cut your expenses and focus only in paying the card. If you still make purchases and you can’t pay it off in full, then you will find yourself with a larger monthly payment and late fees.
4. Make use of interest-free balance transfer.
You may need more than one year to pay off your huge credit card balance. Interest-free balance transfer can be advantageous. You may save thousands of dollars because you’re not subjected to interest charges.
5. Choose the best card
Choosing the best credit card can set you on the right direction. If you can pay in full each month, then a card with cash back is more appropriate for you. Applying for a card with a low interest rate could save you plenty of money in the long-run. If you’re planning to eliminate your credit card debt, then go for a card that can give you an interest free period.
Credit Card Debts Accumulate Faster Than Savings Account Interests
Many people have at least two credit cards. Some people use their credit cards wisely, while others don’t. You may define responsible credit card usage as paying off debt balance every month and using less than half of the available total credit line. If you already own a savings account fund for retirements and emergencies then you are on the right track. However, if your credit card debt amount is equal to your savings account you’ll see that your credit card debts grow faster than your savings account, because typical credit card debts have higher interest than savings account. If this happens, you are facing a serious financial bleeding that will leave you wither and dry slowly. To fix things immediately, you need to start using your cards responsibly while building a respectable amount of savings account.
First you should get a credit card company that agrees to give you cash back on each purchase (cash rewards). Specifically, choose a card that will give you at least 3 percent cash back. It’s preferable not to open up another line of credit if you don’t have to do so.
Next, you’ll need to find a high-interest savings account. Companies like ETrade and INGDirect don’t use minimum balance requirements. Your credit union or local bank can also help you in getting an acceptable savings account rate, while, most online banks usually pay higher interest due to lower overhead expenses.
After you have your high-interest savings account and credit card with cash rewards opened, it’s time to use the credit wisely, don’t go beyond half of the credit limit and don’t put any purchases on the card at any given day that cannot be paid off immediately. Every month, you absolutely need to payoff the whole balance. Pay groceries and gas on your recently opened cash rewards card.
When the end of the month arrives, you will need to do the following:
- Pay all the credit card balance
- Cash out all available cash rewards – if possible transferred directly to your savings account
- Put unexpended money in the high interest savings account right away.
For example, if a credit card offer a 3% cash back and you spend $2000 in purchases every month, you may add $720 annually ($60 each month) to your savings account. That’s not a significant amount of money, but it’s surely better than nothing and requires almost no effort on your part.