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It's okay to use credit cards, if the bill is cleared each month. This leaves your cash in the bank to earn interest. But it is a false economy if you're paying more interest on purchases made by credit.
kellyjones00 (593)
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Interest rate reduction with lock-in: One of the most underutilised methods of saving on credit card debt interest is to try to negotiate a lifetime interest rate. Simply shift all the debt out to another card with a balance transfer, and call the credit card company to say you are about to close the card unless they offer a reduced rate. Go for about a quarter to a third of the regular interest rate. It will remain at that low rate for eight years to life, making the accrued interest bearable.
I recently did this with two balance transfers. If I had not done this, I would have been struggling to pay the interest charges.
myxlfidian (150)
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Rentalrewards.com.au. In Australia, this system enables you to pay your (housing) rent on your credit card for a 1.76% fee per charge. Sounds like a good way to lose money but it's the other way around.
With 55 days interest free, you earn up to two months interest on the rent, so long as you have the money in an interest bearing account paid monthly and calculated daily. Also, if you use a credit card with airline frequent flyer points, you get tens of thousands of points per year. Altogether, you make a gain of substantial proportions.
myxlfidian (150)
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Bust annual credit card fees: Empty all debt off the card through a balance transfer. Then threaten to close the card unless the annual fee is waived this year. Or, if the card is upgradeable to another card, ask a curly question about a feature of the more expensive, deluxe card (i.e. does it cover domestic car rental excess or just international?) and if they say yes and you know that is wrong, upgrade the card and get details of who told you the wrong information. Call back a week or so later and say you were given the wrong information. They will refund the WHOLE FEE as a gesture of goodwill, even though the upgraded card fee might only be an extra $30 over the budget version. Downgrade the card later if you don't want its extra features.
Keep a list of when annual fees are due so you can close the card before they charge it if they refuse to waive it. In general, don't keep cards with annual fees unless they offer exceptional benefits like frequent flyer points for each dollar spent, annual 0% for six months balance transfers on several thousand dollars, low balance transfer rates (under %6) or free travel insurance.
myxlfidian (150)
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6% interest rate with no expiry: Asked your credit card company for a rate reduction and got rejected? You needn't worry. Find two cards that offer 5.99% on balance transfers for 5 or 6 months. It's not an uncommon feature. Transfer the balance to one card, and make a note of its expiry date. A week before the special rate is due to expire, transfer it to the other <6% card. Do this ad infinitum and you will always be under 6% interest. It's a bit more work than a lifetime or long-term interest rate reduction but they are not always freely available. Sometimes they include punitive conditions like having to close down the card the transfer is coming from, for example.
myxlfidian (150)
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Interest free days on your credit card: If you have, say up to 55 interest free days on your credit card purchases, it doesn't mean you have 55 interest free days from the day you make your purchase. It means that interest begins to accrue 55 days from the start of the statement period in which you made the purchase. For example, if you make the purchase 30 days from the start of the statement period, then you will only have 25 interest free days.
thesource (378)
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