I have been working in the financial industry for 3 years now and in doing so have learned SO much about all things banking and finance. Most importantly I have learned amazing ways to capitalize on the money you already have and make more! One of the tips that I find myself giving friends, family, and clients all the time is how to maximize your credit card usage.
Tip 1 - Only Spend What You Have In Cash
I know lots of people who are afraid of credit cards. The biggest misconception of having a credit card is thinking that the bank is giving you free money. They're not. They are lending you cash with the expectation that you will overspend and then owe them that amount plus interest. Credit card interest rates are the highest interest rates in any lending product. Remember- Banks Almost Always Win. For you to be able to "out-smart" the system and capitalize; you need to do things the smart way. I use my credit card as a debit card. What does that mean? It means that I only spend what I know I have in cash. That way I am only spending what I can afford, and I will never be in debt.
Tip 2 - Pay the Previous Statement Balance with AutoPay
I automatically pay the PREVIOUS STATEMENT BALANCE fully every month. By doing this, you are NEVER going to pay anything in interest and you dont have to think about it. It happens automatically, every month. If you follow Tip 1, you also wont have to worry about having the funds available for auto pay.
There are lots of people who have cash in their savings account (that is gaining 0.01% back in interest) and choose to only pay the credit card minimum. I will never understand why but I want to make everyone is aware of the fact that there is NO savings account in the world that will give you the kind of rates that the bank charges you on credit cards. Meaning, it is more beneficial to you to use whatever money you have available to pay off your cards. If not, you are losing. I also wanted to point out to pay the, "Previous Statement Balance" because I see many people pay the entire debt accumulated. In the attempt of paying their whole card fully they run out of cash and begin to create a dependency on the credit card. This is not the way to do it. You don't have to pay the card fully. To avoid fees, you are only required to pay the Previous Statement Balance.
Tips 3 - Reward Systems
Reward systems are the sexiest part of credit cards and I'm obsessed! I have been able to purchase a Nook, Apple Earphones, and roundtrip flights to South Africa, Philly, and NYC in 2 years all exclusively with using my reward points. It's so easy, and anyone can do it! Citibank is the biggest credit card issuer, so starting with them might be a great start because they have so many different options! My favorite credit cards at the moment are: Citi ThankYou Premier, Citi Double Cash Back, Capital One Venture Card, and Chase Sapphire. Hands down, those 4 are the best ones in the market.
Tip 4 - Do not get any Retail Credit Cards
Store cards are the worst things ever. (Except for the Citi Costco card)
Even if you shop at that store everyday, don't do it! Those cards always have extremely high interest rates, they usually do not have convenient methods of payment, and charge high late fees. Your credit gets run every time you get any new card, so if you already own 1,2 or even 3 cards, just know that getting this new retail card will have the same effect on your credit as the rest. Retail cards also do not give you as much points or rewards as the other cards I mentioned earlier do. If it were me, I'd stay away and get myself a Citi Card.
Tip 5 - (Only applies to those who have multiple cards) Familiarize Yourself with all your Cards, and make a Plan for the Cards
If you have more than one card, then you know that they must have lots of differences. The biggest differences are in APR and how many points or miles you receive per type of purchase. For example, I have a Citi Premier card and a Capital One Venture Card. I know that with the Citi Premier, I receive 3 points per $1 on all purchases that have to do with Transportation (i.e gas), but my Capital One Venture Card gives me 2 points per $1 on EVERYTHING. This tells me that on all things transportation related I will only use my Citi Premier card because I get the most for my buck. Knowing little details like that about your cards seem insignificant but can give you huge results. Also keeping in mind which card has and does not have foreign transaction fees while your traveling is important. Avoiding the card that does have foreign transaction fees can really save you a lot of money. Overall, take your time choosing which cards you want to have and do some research!
Extra tip - Most cards have promotional offers in their first 3-4 months of usage, if you don't think you will spend the amount that promotion is asking for, wait it out. Only get the card when you know you will benefit from the promotions!
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