Five More Benefits of Credit Cards and Strategies for Effective Use

You know from my last post that credit cards, when used properly, are actually a great way to save money.  The credit card cash back bonus is like having a one to five percent off coupon on everything you buy.

There are several other benefits.  Credit cards, for example, are a great convenience tool.  They enable you to avoid the need to run to the ATM every day or two in order to obtain the cash necessary for gas, groceries, and other necessities of daily living.  I don’t know about you, but for me cash has always been more of a spending temptation.  I like having little of it in my wallet for this reason.  This also brings a security benefit as you no longer have to sweat the prospect of losing a wallet full of cash that any finder can spend.

Credit cards also save time.  Think about this the next time you find yourself waiting in a grocery store line as the person in front of you goes through the painfully slow process of writing a check.  Why people go to this trouble rather than simply swipe a card that will simultaneously produce a dollar bonus is beyond me.

Remember too that credit cards provide the benefit of delayed payment.  By putting off the need to actually pay by some four to seven weeks, depending on when the purchase occurs relative to the next card billing cycle, you also receive the time value of money and a small amount of interest earnings.

Credit care issuers also have done great work in offering websites chock full of convenience tools.  Log on to your site and you will find easy, ready access to past statements, recent purchase histories, and various analytics  that help you track spending trends and categories.

Still other goodies include extended warranty protections.  Many cards also provide rental car insurance, thus enabling you to forego this expensive add-on to a rental car charges.

So use your credit cards freely — provided you pay them off in full each month.

With that important caveat in mind, it is essential that you keep close track on payment due dates.  Set up an automatic calendaring system by which you are notified on the due date.  Try to coordinate your billing schedule so that all cards are due to be paid at the same time.  Whatever it takes, make sure you don’t miss a payment, as card issuers love to hammer you with penalties when you do.

If you do miss a payment, however, don’t lose hope.  If you have a significant, unblemished history with the provider, you can usually call and have the penalty waived.  Discover is particularly good about this.

A final tip: obtain more than one credit card so that you can maximize savings from those rotating cash back categories.  While it is tempting to just avoid issuers who use rotating categories, it really is worth the trouble.  For example, I keep my Discover Card handy to use on gasoline during the relevant three  month period, while using my Visa Card for all other purchases.  That way, I get the best of both worlds and maximize the use of that ever valuable fiver percent bonus.

So there you have it: the benefits of wife credit card usage.

Oh, and did I mention that you should only follow these strategies if you pay the balance off in full each month?



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