Having a credit card has a lot of advantages especially if you are mindful of your usage. I’m sure that all of us know someone who had a bad experience with credit cards. But don’t let that deter you from getting one because if used properly, you can maximize your credit card benefits and it will be a very rewarding (metaphorically and literally) experience.
I first got my credit card when I was 22 years old. And being young, naive, and foolish, I did experience getting myself in to huge debt because of my uncontrolled spending.
Looking back to what happened then, it’s not really my credit card’s fault but rather, it was my fault. I did buy things that I could not afford to pay in cash.
My younger self did not read the fine print and did not bother with understanding the interest rates and other fees associated with using the credit card.
Foolishly, I also did not pay full and on time. And because of those immature and irresponsible moves, I got myself into a huge debt which, fortunately, I was able to pay off a year after.
Luckily, my stupidity and naiveness about using my credit card did not last that long and I eventually learned from that mistake.
I started reading about how to properly use my credit card and learned a thing or two on how to make the credit card work for me and not against me.
If you are a new cardholder and if you want to know how to maximize your credit card benefits then read on.
Choose the Perfect Credit Card for your Needs
Before you get a credit card, try to understand your spending habits and try to reflect on your needs. Do you travel a lot? If so, then perhaps a travel credit card is best for you.
Are you always shopping for food and other grocery items? Then perhaps you might be more interested in getting a cashback credit card instead. There are a variety of credit cards to choose from.
Once you have selected which credit card will benefit you the most then compare all available credit cards in a similar category. For example, if you think a travel credit card is best for you then compare all the travel credit cards that are available in your country.
Take Advantage of Sign Up Bonuses
After determining which card to get, take advantage of the sign-up bonuses. This is becoming more common as the years go by. Some credit cards offer miles as their sign-up bonus which is sometimes equivalent to a roundtrip ticket when redeemed. Some credit card companies offer gift cards or vouchers to various brands that they have partnered with.
Take Advantage of Free Annual Fee Promos
Just like the increasing number of sign up bonuses, I’m also noticing an increase in credit card companies offering free annual fee. Before you sign up, make sure to read the fine print. Some credit cards do have a spend requirement that you need to meet in a certain amount of time which is usually 60 days from the date of card activation.
Some credit cards offer free annual fee for the first year only. While others offer free annual fee every year as long as you meet their annual spend requirement and some credit card offers free annual fee for life without any requirement. Usually, the credit cards that offer free annual fee for life do not offer any additional rewards that you can earn when using the card.
Related Post: How to Waive Credit Card Annual Fees
Take Advantage of the Time Buffer / Credit Card Float
Having a credit card helps you hold on to your cash for a longer period of time. Unlike cash, you are not required to pay your credit card on the day you purchase the item.
The best time to use your card is at the start of the billing cycle. For example, the cut-off date for one of my credit cards is every 30th, if I purchased something using this card last April 1, my due date for this purchase will be on May 24. In essence, I got 54 days to hold on to my cash without incurring penalties or interest rates on my credit card.
Please be advised that this may vary depending on the credit card so make sure to read the fine print and to remember the cut-off dates and due dates. If you don’t know where to find this information on your Statement of Account, do not hesitate to call your credit card provider.
Pay in Full to Avoid Incurring Unnecessary Fees
Paying in full is my number one rule when I got my second credit card. I will only buy the things that I can pay for in cash. This is to make sure that I can pay my credit card bill in full on every due date.
Paying my credit cards in full helped me avoid paying for unnecessary interests and late fees.
There were certain times in the past though when I really needed to buy a big-ticket item but I did not have the cash to pay it in full. What I did was I availed of their zero percent installment option. This way, I also got to avoid paying for credit card interests.
An example of this is when my laptop broke and turned out to be unrepairable and I really needed a laptop during those times because of some side-hustles that I do online. It wasn’t a luxury but rather a necessity for me during that time.
Get Multiple Credit Cards that Complement Your Primary Card
Another way to maximize your credit card benefits is by getting multiple credit cards from other providers. For example, if your credit card of choice is a travel credit card because you’re a frequent flyer, then consider getting a gas credit card if you also drive in your home country. Or get a cashback credit card to save some money on your grocery purchases.
In my case, I am maintaining a travel credit card primarily because of the free airport lounge and free travel insurance benefit that I get from my card. I’m not interested anymore in earning miles from that card because the spend to miles ratio is not that good. So for most of my purchases, I use another card which makes me earn rewards points that I can convert to miles, pay for my purchases or avail of a product from their rewards catalog.
The best way to maximize this strategy is if you could avail of other credit cards without paying for their corresponding annual fees. I’m always on the lookout for credit card promotions so I could get other credit cards without annual fees for life.
Spend Your Money on Shops that also have a Rewards Program
Check if the stores that you frequently go to have a loyalty program that has a rewards point system and if they do, sign up with them. If they don’t, find an alternative shop.
For example, one of the shopping malls here has a loyalty program where members can earn and redeem rewards points through purchases from participating stores. They are also partnered with the airline that I frequently fly with and I can also use my credit card to buy from their shops.
So in essence, one purchase will give me three reward points – one for the shopping mall loyalty program, one for the airline, and one for my credit card.
Swipe Your Friends and Family Purchases (With Precaution)
Another way to maximize your credit card benefits is by swiping the purchases of my family and friends and even my work colleagues who do not have credit cards. The agreement is that they pay me in full.
All of them are ok with this setup. The only extra effort that I need to do is to accompany them to the shopping malls where they will make the purchase.
There are certain cards here that will make you earn outright rewards and points/miles at the same time and what I do is I give the outright rewards to my friends and I keep the points/miles.
For example, Citibank has an existing promo (as of the time of writing) wherein a P3,000 single-receipt straight or PayLite spend on your Citi credit card entitles you to one (1) treat from Yellow Cab. I will give them this reward from Citi & Yellow Cab for this purchase and in return, I get to earn miles for my card.
The tricky part here is when they request to use your card and pay on a later date. That’s why I only offer to swipe the purchases of my closest friends and colleagues that I know will pay me. And I only have a set amount that I allow for a purchase that will be paid on a later date (please exercise your own judgment in doing this).
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Do you have any additional tips or recommendations? Feel free to share them in the comment section below.