Tag: Credit Cards

Money Saving: Spending more to obtain credit card rewards

Spending more to obtain credit card rewardsSpending more to obtain credit card rewards is one of the worst financial strategies that consumers could follow. Spending more usually means that you do not have the cash to pay the credit card bill. When the credit card statement arrives, the due date is clearly shown. If you cannot repay the balance by the due date, consumers are charged anywhere from 15% to 30% interest. Any savings in sales or rewards will quickly be used up in interest charges.  Sure, you have your reward. But it would have been cheaper not to buy the item at all. Perhaps purchase the reward itself instead of trying to obtain enough points to gain the reward.

Spending More to Obtain Credit Card Rewards – The Right Way

Credit card rewards can be worthwhile, provided you only purchase what you need. Always charge your purchases to the credit card and pay the full balance on the due date. Once you need to pay interest, you have lost any savings from the original purchase. Perhaps your item will cost more than the total price due to the interest charges. Credit card companies are counting on you to miss your payment to begin billing interest charges. In addition to collecting a commission on every sale from the store owner, they make billions from consumers by charging interest on overdue accounts.

Credit card rewards can be very lucrative, significantly, if they save you money for something that you would do anyway. For example, a card that provides rewards for travel to places you were planning to go anyway can be a good deal if the rewards cannot be used for something you like and enjoy, cancel the card and get one that meets your needs.

Be patient. If used properly, the rewards will build over time and save you money in the long run. Whatever you do, avoid spending more to obtain credit card rewards!



Money Saving: Opening a store credit card to get a discount

Opening a store credit card to get a discountOpening a store credit card to get a discount can save you money immediately after the store offers a 10 or 20% discount to you. They do this simply for opening a new credit card account. There is nothing wrong with this in terms of saving money. Provided that you can always repay the balance of the card when you receive your statement.

The store is hoping you will not be able to repay the balance. They will often begin charging interest on the overdue balance at a rate that is around 30%, which is higher than most credit cards from banks. This is really how the store makes a profit, and a rather large profit at that. Any time you can charge 30% on a balance means high profits. So pay off your credit card as soon as the monthly statement arrives!

Opening a store credit card to get a discount – Will You Use It

One of the issues with these incentives is that many people will buy something that is on sale because it is on sale. They actually do not need the item and would not have purchased it if they had not seen it on sale. You are not saving any money at all if you incur interest charges and you do not actually use the item once you get it home!

Another factor to consider is your credit rating. Adding multiple credit cards to your credit rating will, over time, decrease your credit rating. When this occurs, and you need to borrow money for a loan for a car or perhaps your mortgage, it could mean that you will be unable to secure a loan or mortgage and/or pay higher interest rates which end up costing you money than you should be paying. Any money you saved with the initial purchase will be long gone with high interest rates, paying interest, or not being able to borrow money at low-interest rates.

Opening a store credit card to get a discount can be a good thing, but like everything else in life, it needs to be managed to ensure that it does not cost you money in the long run.



Save Money – Pay your Bills after the Holidays

Save Money - Pay your Bills after the HolidaysWell the holiday season is pretty much over and the bills are starting to come in for all of those gifts you charged to your credit cards. It does not matter if it is Christmas, Valentines or just a big birthday party. If you do not pay these credit card bills right away, the interest is going to start and the credit card companies charge a lot!

Their interest rates can be as high as 29% for store based credit cards and 19 to 20% for bank based credit cards. Of course, the best way to avoid these expenses is to not buy them in the first place, however for most of us this is just not realistic. So Pay your Bills after the Holidays on time before the due date.

This site is about helping people save money and we usually do not talk about credit cards. It is more focused on do it yourself projects, and methods to reduce the operating costs for your home,  however given the time of year we thought it would be appropriate to introduce this subject. You might have worked all year long to save money on various projects, kept the heat low or turned the air conditioning off only to pay a lot of  interest on a credit card balance you really did not anticipate.

Credit Card High Interest Rates

Many bank credit cards will charge up to 19% interest on unpaid balances, while store credit cards sometimes charge as much as 29% on unpaid balances. That is a lot of interest and it can take a long time to repay even a small balance especially if you only make the minimum payment each month.

In keeping with the objective of the web site, we would like to encourage our readers to really make an effort to repay your credit card balances as quickly as possible to avoid losing all of that money in interest charges. You can reduce your heating cost, your air conditioning and your hydro usage only to lose all those savings in a few months to added interest charges. Even if you have to take out a small personal loan to repay your credit card balances, you will be ahead of the game since you will pay a much lower interest rate than what you will pay with your credit card. We cannot emphasize this enough.

Pay your Bills after the Holidays on Time

One last thing about paying your bills after the holidays.  Make sure you pay them by the due date or a few days before the due date to make sure you do not trigger interest charges as a result of missing the due date by one or more days. I have had this happen to me. I missed the due date by one day because the bank I deal with took 3 days to transfer the money. As a result I ended up paying an additional $30 in interest charges. Because they calculate the interest due on the full amount for the full time period since the item appeared on my credit card. If you get caught like I did, you can try to get the bank to refund this charge, however it did not work for me.

You might think that the bank was in error and they should have refunded the money to me. Well if you read the fine print, it says next business day for most transaction and a specified period to transfer funds to an external company from your bank. I always allow 3 business days now to transfer money to pay bills I have and this is the minimum.

If I am concerned that it might take longer due to holidays and increased business, I will send the money even sooner to pay my bills on time. Paying bills around Christmas time and other holiday periods mean that it takes longer to process payments. Always allow for this extra period when you are paying your bills to ensure you meet the due date and avoid any penalties or additional interest charges.

For more cost saving ideas to save money around the home, click here.




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