When you are considering whether to get a credit card or not, there will be countless people who wax eloquent about the potential risks and how easy it is to go overboard with your spending, ending up in a mountain of debt from which you can never recover. While there is no denying that a credit card carries with it some risk especially if its owner is an impulsive spender or has poor self control, a credit card can be an invaluable line of credit for various reasons. Apart from being a lifeline during emergencies where you need a large sum of money, a credit card can often cover the cost with just one swipe. But what surprises most people is that credit cards can actually save you a lot of money, both in the short-term as well as in the long-run.
How can Credit Cards save me money?
While it might seem unbelievable that a credit card can be anything but costly, the competition in this field has risen to such a great extent that credit card companies are offering amazing benefits, deals and offers to entice customers to not only sign up for their credit cards, but also to prevent them from canceling their cards. These benefits will save you money if utilised well.
Here are some tips to help you take full advantage of credit card offers…
Stick to essential or pre-planned purchases
Getting an item you never needed at a 90% discount does not mean you saved money - it simply means you wasted the entire amount you spent. When you see fabulous credit card offers and deals for luxurious, branded items, you may be tempted to spend your money because, after all, you are saving so much. The reality is that you never needed or wanted those items but the fact that they were on sale convinced you that you did. Try to limit using your credit card to avail offers only on items that you had planned on purchasing at some point in time.
Ask for freebies
When the credit card salesman is doing their utmost to convince you to sign up for a credit card and giving you the full sales pitch, don’t be afraid to ask them what benefits and freebies they can throw in. Quite often, they will be able to waive off at least one year’s annual fee which means, provided you pay off your bill in full each month, you can use your credit card virtually free for almost two years only after which you will need to pay the fee.
Wait for seasonal offers
Most credit card companies offer a complete range of offers during festivals or holiday seasons. Luckily, Sri Lanka being a country with many ethnicities, there are many festivals and holidays. Especially during Christmas, Sinhala and Tamil New Year and Ramazan, many shops will offer across-the-board discounts coupled with credit card offers and flash sales. Hotels and travel-related businesses will offer discounts during off-season. If you were planning on buying household items, clothes, electronics or going on holiday, waiting for seasonal offers might save you quite a bit of money.
Look for cashback schemes
When researching which credit card you should go for, prioritise those with attractive cashback schemes. Many credit card companies nowadays offer 1-2% (or even higher) on all or selected credit card transactions, which means that if you spend Rs. 25,000 using your credit card, you will get Rs. 500 deposited back to your account. While it might not seem like much, in the long run, that amount will add up and make a huge difference. Think of it as earning instant cash every time you swipe your card.
Break up large purchases into zero interest instalment schemes
If you are planning to make a large purchase (like a new phone or laptop, for instance), look for shops that have partnered with your credit card company to offer zero interest instalment schemes. This means rather than fork out over one lakh in one go, you can stagger the payments while you invest that money in something profitable or simply earn interest with it in the bank. It must be noted that this should only be the case when you are assured of receiving an income for the duration of your instalment scheme. If you do not have a steady or stable source of income, it is always best to pay the full amount in one go.
Pay your bill in full
Finally, it does not matter how much money you save on great deals and how much you earn through cashback schemes if you do not pay your bill in full each month and are charged sky-high interest rates. Not paying your credit card bill in full is the number one reason people go into debt. It might even be worthwhile taking out short-term loans at lower interest rates than the credit card rates to settle your monthly bill in full. Lenders like OnCredit.lk have special short term loans and payday advances to help settle credit card debt.