Make The Creditors Earn You Money

Learn The Rules Of The Game

Earn money back
Credit: KRISTL from the budget diet

Credit cards have been around for years. Sadly, very few people know how to use them effectively. Even less people know how to reap their full benefits. Before we get into some of the benefits, let's explore how credit cards work. Credit card companies charge a processing fee to any business who runs their card to facilitate the transaction between the business and its consumers.

The card holder does not get charge anything extra, unless the business provides a cash discount, for using her card. They will only pay extra if they don't pay the amount before their card's due date.

There is two dates card holders should be aware of:

  1. Due date

  2. Cut-off date

The due date is when the bill is due by. You need to pay the last billing cycle's full amount on this date or you will be charged interest on whatever portion you don't pay.

The cut-off date is the date where a new billing cycle begins. This means that any amount charged after this date does not have to be paid until the next month's due date. Note that cut-off dates are always a few days before the due date.

For example:

Your cut off-date is the 15th of every month and your due date is the 17th. This means that any charges you did on your card from March 15th to April 15th will have to be paid in full by April 17th. If you don't, then you will  pay interest on whatever portion you did not pay. One strategy I tell  the people on a tight budget I consult  is to wait till the cut-off date. That is, if they are close to it. The new charges will not have to be paid until the next billing period. This gives them another whole month to pay it back. Let's say that today is the 14th of the month and you already charged your card with about as much as what your monthly income is. You can wait until the 16th to make new chargers since on the 17th, all you have to pay is the amounts from the 15th of the previous month to the 15th of the this month.



Make The System Work For You

This way of using the credit card makes you what is known as a “transactor.” This means that you only use the credit card as an useful way to make transactions, but not really as a loan provider. I use my credit card to pay for everything because of the added convenience that I don't have to carry cash. Also, it is an useful way to keep track of where your money goes. I always had a hard time keeping track of where I spend my cash. Online banking allows me to keep track of where my money is going. Most banks now offer free reports, pie charts, and graphs on how you spend your monthly income. 


Do Not Get Fooled Again

Surf Through The Creditors Policies

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Travel The World

Take Advantage Of The Rewards

Travel The World With Rewards

Now that you understand how to use a card without getting charged interest, lets move on to the monetary benefits. There are plenty of cards now that offer offer points which can be turned into cash or a variety of rewards. Some offer up to 6% cash back on purchases.  My favorite of all is the frequent flier miles. Since I use my credit card to pay for everything, I get free flights recurrently through the year. I do mean free because I am a transactor. I pay my card's last statement amount before the due date. In essence, everything I buy comes out to be cheaper to me as opposed to someone who pays cash or uses their card ineffectively. I also reap the benefit of knowing where my money is going by the reports provided by my bank's tools. My suggestion for anyone who doesn't have a credit card or doesn't really use them that much for fear of over spending is to get over it. Get a card and use it. Don't forget to use the online banking tools to keep track of your expenses and total balance. Go ahead, start under paying for your purchases.