Credit cards have a couple of secrets that the common consumer can benefit from. Below, we’ll uncover a couple of credit card secrets, so you can take advantage of the countless ins-and-outs of ultra-competitive lenders. With these two tips, you’ll understand how to use credit cards in ways you might have never considered.
Use Multiple Lines of Credit
If you’re like most people, then you’ve probably got several credit cards, right? If so, then you can use the competition that exists between lenders to your advantage with this next credit card secret.
Tip 1: Ask your bank if they’ve got a balance transfer option available.
If so, make sure it’s a zero-percent balance transfer. For example, if you have a balance on a Capital One card, and then you sign up for a Bank of America card, then it should clearly state in the signup information, the terms of their balance transfer offer.
If it makes sense, then pull the trigger and move your debt. Plan to pay it off fully within the next six to nine months to come out ahead.
Obviously, if a bank can get you to transfer your debt from the competition to their own coffers, then they get you to pay the interest on that debt for a long time. This means, in order to sweeten the deal, they often give you several months free of interest on that debt. It’s literally like giving away money!
So if you move your debt from one lender to another, receive a 9-month reprieve on interest payments, and manage to pay off your debt in those nine months, then you’ve effectively received a free loan from your new lender.
Tip 2: Go for Cards with a Beneficial Rewards Option
This may seem obvious, but the truth is, far too many people obtain credit cards that have rewards which don’t really apply to their lifestyle. After all, if you hate the cold, then what good is it to get a trip to Moscow as an end-of-the-year reward?
With this in mind, when you get a card that provides you with frequent flyer miles; make sure you don’t pay cash for things such as groceries, department store purchases or even gas – put it on your card!
Of course, in order to truly take advantage of this offer, you must avoid carrying a balance – head to your house and pay off the purchase right away. Then, the credit card companies don’t get to take advantage of the interest, but still, of course, have to pay out the promised rewards and points.
This only works out so well for them because most people carry their credit balances from one month to the next. Many people every year take advantage of this and get free trips abroad, at the end of the season, for their entire family. You can really rack up the frequent flyer miles with this disciplined approach.
All card companies love it when you carry a balance – this is, after all, how they make money. If everyone followed this tip, then the companies would have to close down because they’d go bankrupt and couldn’t fund their operations.