How Can Credit Cards Help You Save Money
Credit cards enable consumers to manage payments in secure and reliable ways. While some of them charge fees and interest rates that you might not find favourable, there are others that come with rewards and special benefits that can help you minimise costs and boost savings. Read on to learn not only the best ways credit cards can help you save money but also the most rewarding ones to use.
Best Ways You Can Save Money Using Credit Cards
Now is the time to save money using the right credit cards. You need to prevent the risks of running into debt or shelling out several hundred bucks in interest and fees. What are you to do? Get the most useful and rewarding credit cards for 2023 and beyond—find more information about them in the next section. Meanwhile, here are the best ways to use credit cards to save money on your expenses.
1. Earn cashback rewards for purchases
Using a cashback credit card is one of the best ways to save money. It lowers the cost of your purchases by giving you rewards in cash or percentage discounts for your online and in-store purchases. For instance, if you use a credit card that offers 3% cashback, you receive a 3% discount on all of your purchases. So, in one year, you would have saved up €1,080 if you spent €3,000 on purchases monthly using this credit card.
2. Earn miles or points for your travelling
Credit cards with travel rewards can help you accumulate miles and points that you can use later for a free trip or hotel stay. Over time, you can save up the rewards and use them for a weekend staycation, holiday trip, or annual vacation. If you do not have a travel rewards card, you might be able to save money by taking advantage of discounts that your credit card issuer offers in partnership with specific hotels or car rental companies. Always keep an eye out for these benefits while making travel arrangements.
3. Avoid purchasing travel insurance
Some credit cards provide travel insurance of various kinds, which can help you with the cost of a variety of losses (or risks) associated with personal items or luggage safety, car rental, and trip cancellation. Using such cards, you avoid spending the money you would have used to buy or pay for travel insurance.
4. Enjoy consumer financial protection
Several forms of protection are available with some credit cards. In some countries, the law protects credit card users by limiting their loss to a certain amount in the event of theft, provided that the victim immediately informs the card issuer. Another instance is if you buy something and the price drops a few days or weeks after your purchase, your card may offer price protection and guarantee your reimbursement.
5. Build good credit
Using your credit card responsibly is a smart way to improve your credit score. And when you have a better credit score, you may be able to get lower rates on personal loans, car loans, mortgages, and several other credit-based funds. It can also allow you to sign up for some utility services without making a large deposit. Besides, a good credit score reduces your cost of finding a job by boosting your chances with many employers who will run credit checks on you.
6. Get lower interest rates
You might be able to save hundreds of dollars by transferring a balance from one credit card to another that has a lower interest rate. By doing so, you will enjoy an extended time to pay off your credit card debt and not have to accrue interest. For example, if you transfer a $4,000 balance from a credit card with a 15% APR to another one with a 0% APR for a year, you will have saved approximately $500. Also, if you need to buy a costly item, using a credit card with a 0% APR will allow you to spread out your payments without accruing interest.
7. Make fee-free foreign transactions
When you make purchases in a foreign currency, whether at home or abroad, most credit cards charge a fee. The amount is usually about 3% of the total transaction value. These costs normally pile up rapidly when you make payments with a card abroad. However, some credit cards do not charge for overseas transactions; you should try to get them if you want to save money on expenses while abroad.
8. Enjoy flexible and accountable business spending
In the business sphere, there are corporate credit cards for flexible and accountable spending on official affairs. Employees are free to make purchases using their corporate credit cards however they see fit. Such cards also provide them with liability and a reason to spend less money. So, employees are more careful with their spending when they are aware that it is being monitored every month. In that way, corporate credit cards, therefore, provide managers with greater visibility into company expenditures than cash or personal cards.
Note: The catch with using credit cards that offer cash back, points, or miles as rewards is that you must be able to pay off your debt each month. Otherwise, whatever cashback or benefit you may have accumulated can be cancelled by the high-interest rate that you would be charged.
Best Credit Cards for Saving Money (with Zero or Low APRs)
The best credit cards for minimising the cost of debt and maximising savings are those with a 0% introductory APR period, low-interest rates, and affordable or no fees. With them, you can quickly repay what you borrowed. Check out our collection of the best credit cards for saving money and pick any of them that appeals the most to your financial lifestyle.
1. Capital One
The Capital One Quicksilver Cash Rewards Credit Card offers a 0% introductory APR. This interest rate applies to purchases and balance transfers for a period of 15 months. This card has no annual fee and no foreign transaction fees, yet it rewards the user with up to six months of complimentary Uber One membership, 24-hour travel assistance services, travel accident insurance, 1.5% cashback on every purchase, and a $200 welcome cash bonus. However, to apply for it, you must have excellent credit, and its variable APR ranges from 19.24% to 29.24%, which is quite a high range.
2. Nexo
The Nexo Card is a crypto credit card that gives back up to 2% of every purchase in crypto rewards and can be used to manage tax-free spending. It lets its users spend cryptocurrency without selling it, earning up to 0.5% in BTC and up to 2% in NEXO.
Nexo’s credit card was designed to help people save money on their expenses. That is why it has a low APR that ranges from 0% to 13.9%. Moreover, it has no minimum monthly repayment and no monthly or annual fees. The Nexo Card also lets you use your crypto as collateral; hence, it is one of the best digital services for obtaining crypto loans.
3. Gemini
The Gemini Credit Card is a crypto credit card for consumers to earn instant rewards on purchases. You can get 3% back on dining, 2% back on groceries, and 1% back on every other payment when you use this card at online and physical stores. It is a Mastercard that charges no annual fees, no currency exchange fees, and no foreign transaction fees. The APR on this card ranges from 17.49% to 29.49%.
4. bunq
bunq is a neobank that issues a unique fee-free Mastercard credit card to its customers. The bunq credit card is secured by the user’s bank account rather than a credit line from a financial institution or major credit card company. What this means is that its customers do not need to worry about running into debt, high APRs, or monthly payments because they will be using a credit card that works like a debit card.
According to bunq, the purpose of its credit card is to allow you to conduct transactions with all merchants, especially those that prefer credit cards to debit cards, while your bank account balance goes toward the deposit. You can get up to 2 free Mastercard physical cards and up to 25 virtual cards for safe payments offline and online.
5. Klarna
Klarna is a global leader in the buy-now-pay-later (BNPL) market. This fintech company issues a contactless Visa card that is available in physical and virtual forms. The cards can be ordered (or created) in the Klarna mobile app.
The Klarna card is not a typical credit card, even though it has 0% interest on purchases for which payments can be made within up to 30 days. Instead, it is linked to an existing bank account, just like a normal debit card. However, this card helps you save money by allowing you to split payments for your purchases into about 4 instalments at a cost of $4.99 monthly. It also does not impact your credit score.
6. Upgrade
If you open a Rewards Checking account with Upgrade and make three debit card transactions, you will receive a bonus of $200 in your account. This account also comes with a Visa credit card that offers unlimited 1.5% to 3% cashback on payments for purchases in certain categories, which include home, grocery, gas, and healthcare needs. The APR on this card is between 14.99% and 29.99%.
The Upgrade Credit Card is linked to a credit line from $500 to $25,000 so that you can confidently pay for purchases within this amount. Besides, you can earn up to 10% cashback when you use the Upgrade Shopping service powered by Dosh. Your cash rewards from Upgrade are redeemable provided that you make monthly payments, which can be debited directly from your savings or checking account.
FAQ
The money in your savings account should be for your future needs and other specific purposes, which could include emergency funds. You should use your credit card for regular expenses, such as utility bills, groceries, and subscriptions. It is better to get a credit card that offers cashback and other rewards so that you can save money.
Using 100% of your credit card balance is one of the common spending mistakes to avoid. It shows that you are stretching yourself too thin. Also, it does not enable you to keep your credit utilisation ratio below the recommended mark of 30%.
Yes, it is generally smarter to use a credit card instead of a debit card, which is typically linked to your checking or savings account. Credit cards offer stronger fraud protection than debit cards. Also, some credit cards come with 0% introductory APR, cashback, points, miles, bonuses, and other rewards. So, using a credit card can be a smarter way to save money as you pay for your purchases.
Yes, it is good to put your everyday purchases on a credit card, provided that you are able to pay back the balance in time. Aside from helping you build credit, this practice can also place additional protection on your transactions and reward you with cashback, points, miles, and bonuses.
The most powerful credit card is subjective rather than objective. In other words, a card might have features and offers that make you consider it the most powerful, but that does not mean it will be perfectly suitable for another user. Nevertheless, to answer this question, the most powerful credit card is the one that is excellent for making fiat and crypto payments online and offline and does not fail to reward your purchases in cashback and other bonuses.
The Takeaways
You need a combination of the right knowledge and good spending habits to manage your finances properly. One basic way to show that you have these skills, which are essential for financial success, is to use credit cards wisely, avoiding common mistakes while maxing out on rewards.
Follow the guidelines we have provided in this article to save money when using credit cards. There is no better way to avoid paying more than you ought to on credit card interest rates and fees.
