Use your credit cards wisely

One thing that not many people think about is why credit card companies exist. They don't exist to provide you with a free service of convenient shopping as their main goal. No, their main goal is to grab as much money from you as they can! This is the same with any bank cards, although they take a slightly less direct approach in making money off of you. Instead of charging you excessive rates, they use your money for their investments.

Although there are many perks to using a credit card, I always advice my family and friends to not use it to buy things they cannot afford. The rewards from using these cards are often peanuts in size; most free cash-back rewards cards will barely give you 2%, and those are the paid ones. So if you charge 10 grand a year on the best cash back cards, you'll only get $200 back. Perhaps you think $200 is a lot, but if you don't have the urge to buy stuff due to the convenience of the credit cards, I guarantee you'll save a lot more than $200. And that's only when you pay every single statement on time in full.

If you are careful with your spending, then carefully think about which card to get, because you'll not want to have multiple credit cards. 1 or 2 is fine ... but I've met people who carry more than 5 credit cards! How on earth do they keep track of their bills? Having multiple cards just exponentially increases your chance of missing a payment.

My advice: find a card appropriate to your lifestyle and stick with it.

Credit card debt consolidation

Last time I showed several cards with low APR rates. But what if you already own several high interest cards and have accumulated a significant amount of debt?

One of the things you can do is to call your credit card company and ask for the interest rate to be lowered. They will usually be willing to lower by a few percent to at least competitive rates for your credit standing. This is enough to save you hundreds of dollars in a year if you have several thousands of dollars in debt.

Another thing you can do is use a debt consolidation service. Usually these services are used by businesses to settle their debts without declaring bankruptcy. However, there offer services to consumers as well. Most debt consolidation services will merge your debt from various credit cards into one - at a fixed interest rate. The rate should be lower than what the credit card companies are charging you and you have less headaches now that you only have to pay off a single source.

Credit card rate

One of the biggest concerns over credit cards is the interest rate that is charged when the balance is not paid off in full each month. When the balance is not paid in full, interest is charged for the amount owed starting from the day in which the money was borrowed, which could have been over a month ago. As such, if you are the type who just pays off the minimum balance each month, it will save you a lot of money if you apply for a card with a low interest rate.

Here are the cards with the lowest interest rates:
Capital One® Platinum Prestige
Citi® Diamond Preferred® Card
Bank of America - Ducks Unlimited WorldPointsTM Platinum Plus® Visa®
Bank of America - Platinum Plus® Visa® Card

These cards have a very low APR rate, some as low as 5.5%, compared to other credit cards which are usually over 15%. However, you need to have a good or excellent credit rating in order to apply for these cards.

Why use credit cards?

Some people use credit cards to purchase things that they cannot afford. Some use them to gain rewards. Some use them for convenience. In this blog I'll be discussing the various types of credit cards available and the advantages of each.

What do you use them for?