Your credit card can be a double-edged sword: depending on how you use it, it can be your worst enemy or greatest ally. Luckily, plenty of credit card tricks are available to help you out.
If you use your credit card carelessly, you will likely get into trouble and throw off your finances.
However, when used intelligently, a credit card can be a game-changer. It can be a great source of instant credit while also giving you a host of other important benefits to enjoy.
Whether you already have a credit card or are looking to get one, these 6 handy tricks will help you use your credit card to your advantage.
1. Do your research
It sounds simple, but one of the main credit card tricks is to do your research before you opt for the first credit card you see. It is hard to stress just how important doing your research is. There are a few things you need to know about the credit card you’re choosing, such as:
- Reward features
- Minimum repayments
- Cashback
- Charges
- Annual fees
- Extras
Shopping around for the right credit card is crucial. If you don’t take the time, then you may miss out on awesome offers such as fuel discounts, shopping-related rewards, air miles, and even dining options.
It is also vital that you read the fine print associated with the card. Research is essential to maximise your credit card experience.
Utilise comparison websites to find the best promotions.
There are heaps of comparison websites out there that do all the hard work and find the best credit card for you:
- Points Hack is excellent for showing the best, up-to-date travel point promotions.
- Canstar is a popular comparison site for anything from insurance to credit cards.
- creditcard.com.au has a user-friendly interface that enables you to customise results to suit you.
With the above websites, you can filter results to show credit cards with the best rewards programs, bonus points, no annual fees, low interest rates, and more!
2. Take advantage of reward points & benefits
As mentioned above, many credit cards offer reward point promotions and cash-back offers. Airline travel points are one of the most popular rewards. However, you can even take advantage of discounted utility bills, health insurance, restaurant bills, movie ticket purchases, and more.
You can earn money by spending on your credit card if you take advantage of the best offers.
Forget loyalty
If you have been loyally using a credit card for a number of years, contact the provider and ask for an offer. If they can’t offer one, then forget the loyalty and change provider as soon as possible. These benefits, big or small, can make a huge difference in the long run.
Credit card companies run promotions all year round, and taking advantage of them should be one of your top priorities when choosing a new credit card.
A credit card promotion might include 110,000 bonus Qantas points just for signing up. This is enough to fly from Sydney to London return, saving you thousands of dollars!
Most of the time, for every $1 spent, you will also receive up to 2 rewards points, helping them to stack up over time.
Rewards credit cards also often include travel insurance, airport lounge access and extra perks throughout the year, like discounted domestic flights, bonus points when purchasing through certain retail stores and reduced restaurant bills.
3. Be smart with repayments
Taking on a credit card is a big responsibility and takes a lot of self-control. It’s easy to get carried away and max out the card without having a clue how you are going to pay back what you owe.
The more you borrow, the longer it will take to pay off your credit card, and the less you repay each month, the more interest you will accrue.
To manage this, we recommend setting aside a portion of your wage each week or month to repay your credit card. The more you can repay, the better, as this will help minimise interest charges.
It’s also crucial to avoid making only minimal repayments. This approach extends the duration of your debt, increases the total interest charges, and can negatively impact your credit rating.
Avoid late payment fees at all costs.
One of the credit card tricks that goes without saying is that paying on time is critical. Usually, late payment fees associated with credit cards are substantial, not to mention incredibly damaging to your credit score.
Remember, the better your credit score is, the better rates, fees, and offers you will receive, so keeping a good credit score is crucial!
Your credit score is closely tied to your repayment history and late payments can heavily impact it. If your credit score is already damaged, credit repair is a very real and beneficial process. We recommend contacting a credit repair company.
4. Keep your credit utilisation ratio low
A credit utilisation ratio (or credit utilisation rate) is the amount of credit you currently use compared to how much is available. Essentially, your credit utilisation ratio is calculated by the following formula:
Credit utilisation ratio = Total credit card debt / Total available credit
So, if you have a credit card limit of $1,000 and you have spent $300, the calculation would be $300/1,000, giving you a credit utilisation ratio of 30%.
Why is it important to keep a low credit utilisation rate? Maintaining a rate less than 30% reassures credit reporting agencies that you do not borrow above your means. In turn, you can expect your credit score to improve.
Additionally, keeping the amount owed as low as possible will help you to remain in control of your credit card debt. This is one of the lesser-known credit card tricks, but a great one to know!
5. Restrict the number of credit cards you hold
Having too many credit cards increases your tendency to spend and the risk of loss or theft.
If you must have more than one card, it is best to own only two maximum. One for everyday spending and one for emergencies. Credit card debt can severely affect your life and financial future, so use your credit card wisely.
The outstanding debt can pile up drastically if you have multiple credit cards. In the future, this could lead to difficulty when it comes to getting loans or any kind of credit. Therefore, it is best to consolidate these debts.
Credit card debt consolidation combines all current debts into one new debt with a new (usually lower) interest rate and a more manageable repayment schedule.
Using your credit card responsibly can bring many financial benefits. It also helps you plan and optimise your resources far better. A credit card is a great financial asset if used properly alongside these credit card tricks.
6. Use your credit card as a tool
Credit cards are surrounded by a negative stigma of uncontrollable debt, bad credit scores and crazy interest rates.
In reality, as long as you are a responsible lender, a credit card can be a super helpful tool for boosting your credit score and providing you with fabulous perks, such as purchase protection insurance.
Purchase protection insurance.
Purchase protection insurance is one of the most amazing credit card tricks, but hardly anybody knows about it!
It covers items bought with the card against theft, loss, or accidental damage, typically for 90 days after purchase.
There can be claim limits per item and year, and exclusions may apply, such as perishables or second-hand goods.
This feature is often included with premium credit cards, but you can check the card’s terms and conditions for specific details.
Using a credit card to boost your credit score
How can a credit card boost your credit rating? As mentioned earlier in this blog, keeping your credit utilisation ratio can help improve your credit score, but it doesn’t stop there.
Making regular purchases on your credit card and repaying fast and in full can greatly boost your credit rating.
For example, every time you purchase new clothing or tech or refuel your car, pay with your credit card and immediately pay it off.
This will significantly boost your credit score over time because it shows you repay credit card debt quickly, proving you are a responsible lender.
Do these credit card tricks actually help?
The answer is yes. By implementing these credit card tricks, you can use your credit card more effectively and enjoy great rewards.
People often do not receive the guidance they require when getting their first credit card. This can lead to being stuck in a debt cycle, facing bad credit, or simply missing out on benefits by choosing the wrong card.
Credit cards are confusing at the best of times. Trying to understand and keep on top of all the different dates, figures and percentages that come with credit cards can be overwhelming.
By taking note of these credit card tricks, you can enjoy more freedom and peace of mind when it comes to your finances.
Use these credit card tricks for yourself!
The bottom line is that everyone sometimes needs a little help with their finances. Whether you’re experienced or a newbie, it is always nice to have guidance.
Unfortunately, many people have already landed in excess debt or with a bad credit score due to past credit card misuse.
This can make getting finance, including credit card approval, very tricky and interest rates very high.
If this applies to you, or if you would like to consolidate your credit card debt, the Australian Lending Centre could help you receive finance when the banks say no.
