The reality of it is that your credit card can either be the bane of your existence or your best friend. That depends entirely on how you use it and just how much you know about getting the best out of your credit card. Luckily, there are plenty of credit card tricks available to help you out. If you use your credit card carelessly, you will likely end up in trouble and throwing off your finances.
However, when you opt to use your credit card judiciously, it can be great. 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
- Annual fees
Some cards may even offer things like fuel discounts, shopping-related rewards, air miles, and even dining options. However, it is good to know about the rewards offered. If you don’t own a car, the fuel discount won’t be important to you, so you might choose another credit card option instead. It is also vital that you read the fine print associated with the card. To maximise your credit card experience, research is important.
There are heaps of comparison websites out there that do all the hard work and find the best credit card for you. Canstar is really popular, but creditcard.com.au has a really user-friendly interface that enables you to customise results to suit you. 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
Many credit card companies offer reward points and cash back in certain circumstances. For example, when you pay utility bills, restaurant bills, movie ticket purchases, and more. Some card issuers have teamed up with retail chains to provide you with cashback offers and discounts, while others provide air miles, travel insurance and more. Technically, you are earning by spending on your credit card when you keep track of the rewards offered.
Points earned can easily be redeemed against gifts that feature in the company’s reward catalogue. They can get you access to things as small as a gift voucher or something a substantial as a car. Commonwealth Bank offers an awards program where you earn points for every $1 spent. These points can be spent in places such as Myer, Flight Centre and to book hotels. This is why these little credit card tricks can be so helpful!
Credit card companies offer benefits all year round and taking advantage of them is definitely in your best interest. If you have been loyally using a credit card for a number of years, then make sure to contact your credit card company and ask for an offer, they will usually apply it to reward your loyalty and keep you on board. These benefits, big or small, can make a huge difference in the long run.
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 is likely to take to pay off your credit card and the less you repay each month, the more interest you will pay.
We recommend putting aside a set amount of your wage each week/month to go exclusively towards repaying your credit card. The more you can repay the better because making minimum repayments will mean that by the time you end up paying off your credit card (if ever), you will have spent hundreds or even thousands more than had you made bigger repayments. Making minimal repayments can also have a negative impact on your credit rating.
One of the credit card tricks which goes without saying – paying on time is a hugely important factor to consider. Usually, late payment fees associated with credit cards are quite substantial, not to mention incredibly damaging to your credit score. Remember, the better your credit score, 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 your credit score. If it is too late and your credit score is already damaged, then credit repair is a very real and beneficial process. We recommend getting in touch with Clean Credit.
4. Keep your credit utilisation ratio low
A credit utilisation ratio (otherwise known as credit utilisation rate) is the amount of credit you are currently using, 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 are using $300 of this then the calculation would be 300/1,000 which would give you a credit utilisation ratio of 30%.
Why is it important to keep a low credit utilisation rate? Maintaining a rate of 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. Plus, 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 really great one to know!
5. Restrict the number of credit cards you hold
When you have too many credit cards, it not only increases your tendency to spend, but it increases the risk of loss or theft. If you must have more than one card, it is best to own only two maximum. One for normal spending, and one for emergencies. Credit card debt can severely affect your life and your financial future, so use your credit card wisely.
If you have multiple credit cards, the outstanding debt can begin to pile up drastically. 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 ties all of your current debts into one new debt with a new (and usually lower interest rate) with an easier repayment schedule.
Using your credit card responsibly can bring a lot of good in the form of financial benefits. It also helps you to 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 really negative stigma of uncontrollable debt, bad credit scores and crazy interest rates. In reality, so long as you are a responsible lender, a credit card can actually be a super useful tool that can boost your credit score and provide you with awesome perks, such as purchase protection insurance.
What is purchase protection insurance? Put simply, it’s insurance that comes from purchasing new products with a credit card. It’s one of the most amazing credit card tricks, but hardly anybody knows about it! Want to buy a new TV but don’t want to pay to insure it? Purchase it on your credit card and you will have 6 months insurance from theft, loss or accidental damage from the date of purchase!
How can a credit card boost your credit rating? As mentioned above, keeping your credit utilisation ratio can help to improve your credit score, but it doesn’t stop there. Making regular purchases on your credit card and repaying fast and in full can provide a huge boost to your credit rating. For example, every time you purchase new clothing, tech or refuel your car, pay on your credit card and then immediately pay this off. This will significantly boost your credit score 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 will be able to use your credit card in a more financially successful way. People often do not have the guidance they require when getting their first credit card. Usually, this often means they end up in debt or in a stressful situation.
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.
The bottom line of using these credit card tricks
The bottom line is that everyone needs a little help with their finances sometimes. 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 misuse of credit cards in the past.
This can make getting finance including credit cards approved very tricky, and interest rates very high. Luckily, there are companies around such as the Australian Lending Centre who could help you receive finance when the banks say no.