Credit Card Secrets: 3 Great Tips for Using Your Debt
Like other financial investment vehicles, credit cards have a lot of “secrets” that the average consumer never learns to take advantage of, and businesses like it that way. Indeed; if more people knew and used them; lending through credit as an institution would cease to exist as margins were reduced.
Here are some credit card secrets to better position you to take advantage of the many ins and outs of these ultra-competitive lenders. In just three tips, you will learn how to use credit cards in ways you never would have thought.
Tip 1: get cards with a beneficial rewards option
This may seem obvious. But the truth is, too many people get credit cards that have rewards that don’t really apply to their lifestyle. After all, if you hate the cold, what’s the use of traveling to Moscow as a year-end reward?
With this in mind, when you get a card that gives you frequent flyer miles; make sure you don’t pay cash for things like groceries, department store purchases, or even gas – put it on your card!
Of course, to really take advantage of this offer, you should avoid carrying a balance – head home and cancel the purchase immediately. So the credit card companies can’t take advantage of the interest, but they still of course have to pay back the promised rewards and points.
The truth is; This only works very well for them because most people carry their credit balances from month to month. Many people every year take advantage of this and get free trips to Europe or Canada, etc., at the end of the season, for their whole family. You can really rack up frequent flyer miles with this disciplined approach.
All card companies love having a balance; after all, this is how they make money. If everyone followed this advice, companies would have to close because they would go bankrupt and could not finance their operations.
Tip 2: Put all business-related purchases on credit
The next credit card secret involves very high-level banker-like knowledge; as such, we will use an example of how to take advantage of it. Let’s say you want to buy home repairs; It will be difficult to obtain a loan in the housing market after the collapse of 2008.
There’s no way lenders want to risk shelling out money after the subprime collapse, which happened, after all, because they sold loans to people who couldn’t repay them.
Then what do you do? Put repairs on a credit card. Even if this card has a 12% APR, if you borrow roughly $ 50,000 and hold it for just a couple of months, you actually only owe 2% of the full amount if you pay it back.
Of course, for this to really work, you must be in the business of changing homes. In short, you will pay a small fraction of the usual amount needed to finance business projects with the necessary capital.
Tip 3: Use Multiple Lines of Credit Wisely
If you’re like most people, you probably have multiple credit cards, right? If so, you can use the competition among bankers to your advantage with this next credit card secret.
First of all; ask your bank if they have a balance transfer option available. If so, make sure it is a zero percent balance transfer. For example, if you have a balance on a Capital One card and later sign up for a Bank of America card, email or call them regarding the terms of their balance transfer offer.
If it makes sense, pull the trigger and move your debt. Plan to pay it off in full within the next 6 to 9 months (usually) to get ahead.
Obviously, if a bank can get you to transfer your debt from the competition to its own coffers, then it will get you to pay the interest on that debt for a long time. This means that, to sweeten the deal, they often give you several months interest-free on that debt. It is literally like giving money away!
So if you transfer your debt from one lender to another, receive a 9-month suspension of interest payments, and are able to pay off your debt in those nine months, then you have effectively received a free loan from your new lender.
Use credit cards wisely
In conclusion, especially with the latest “secret”, you can move your debt from one bank to another over a period of several years! You will save the equivalent of several years of taxes in a large enough sum if you finally pay off the loan within the suspension period.
Keep in mind that all credit card companies compete with each other; in the free market, this means that they make the most money by offering the consumer the best deal. Take advantage of that!
