How to save money with Credit Cards

I got my first credit card after I received my first big job offer because I needed to move across the country. I never had a credit card before because I wasn’t very educated on how they worked. I thought credit was a bad thing, and to a degree I was right to think so.

However, after I did some research, I began to look at credit as a tool to save money, rather than a tool to spend money. This only works if you use your cards wisely.

Most cards offer a form of cashback rewards. However, if you look and read the fine print you will often discover all sorts of limitations. Often, there is cap on how much you can earn back ($100 per year on some cards). Or you will only earn cashback on certain purchases (groceries, gas, eating out, etc). Sometimes these purchase categories will rotate! This makes it difficult to keep track of and most people will give up trying to ‘game’ their card to maximize their benefits.

Just to be clear, I am NOT an affiliate for any credit card company or bank. The cards I suggest are in my wallet, and I use them carefully and always pay them off. I essentially use the cards to save money. I have a citibank card that has 2% unlimited cashback. I have a chase amazon prime card that gets unlimited 5% back on Amazon purchases. Although 2% does’t sound like much, It’s good to save every cent you can. Everyone has expenditures, so why not save a little bit on every purchase or bill?

For example, say I buy lunch everyday at the office. If I am using my card with unlimited  2% cashback to buy lunch everyday at work ($35 a week average). Across 50 weeks, this is about $1,750 a year. That translates to $35 dollars cash back.

Effectively, I eat lunch 5 times a year for free. This is just a small example.

How I use credit as a tool:

  1. Ignore the interest rate for the card
    • This sounds crazy, I know! But if you follow these rules you will never pay interest!
  2. READ READ READ the terms! If you don’t understand them, find someone who can explain it too you!
    • This is critical to ensuring you won’t get screwed later.
  3. Find a card with 12-15 months no interest (optional)
    • This is handy if your in a tight spot and you might need to keep a balance on the card for a few months while you get back on your feet. Pay the balance off before the end of the term however!!!
    • If your not in a tight situation, this wont matter.
  4. Find cards with very open cashback terms, or cashback terms that may work in your benefit
    • You don’t want to waste time trying to keep up with lenders changing rules. Try to find a card that doesn’t rotate your cashback options.
    • eg. you travel a lot, and the card gives 3% back on gas year round
    • eg. you buy stuff on amazon, and their card gives you 3% cashback (5% for prime), but only to spend at Amazon.
    • eg. you get a 1-2% cashback card and use it everywhere (open terms)
      • make sure there is no limit! Very few cards like this exist, but I assure you they do!
  5. Always pay off the balance before it is due
    • This is the only way to not pay interest
  6. Don’t make purchases that will prevent you from paying the full balance each month
    • unless you are working on step 2, of course.
  7. Always pay off the balance before it is due
    • Saying this twice so it will sink in… Good luck!

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