Credit cards allow you to borrow money up to a pre-set limit for your purchases or balance transfers. Card issuers will charge interest if you do not pay off your full statement balance by the payment deadline. You will be charged for late fees if you miss payment due dates. The convenience of using credit cards as a payment option comes with the potential cost of fees and interest. But if you use credit cards properly, you can save money in many ways.
1. Cash back or travel rewards
There are many cash back credit cards that give you cash rewards on your purchases. The cash rewards offered by different cards vary. In general, you can expect between 1% and 2% cash back on most purchases. You can receive higher cash rewards on select purchases. Sometimes credit card rewards are in the form of points or miles, which are redeemable for travel credit or shopping gift cards.
For example, Wells Fargo Cash Wise Visa® card offers unlimited 1.5% cash back on all purchases. In addition, it lets you enjoy 1.8% cash rewards on qualified digital wallet purchases, like Apple Pay® or Google Pay™, during the first 12 months from account opening.
2. Sign-up bonuses with new credit card accounts
Credit cards with rich bonus can let you earn substantial rewards in the first few months of account opening. Some credit cards offer $150 bonus cash back after $500 is spent on purchases within the first 3 months from account opening, which is a whopping 30% cash back on the first $500 charged to your credit card.
A few credit cards offer top-notch bonus valued at $500 or more.
3. Buy now and pay later, with no interest cost
Credit cards with 0% introductory interest on purchases can help you save money. If you need to make a big purchase, 0% intro APR credit cards let you borrow money from the card issuer for an extended period of time without incurring any interest or fees. As long as you make the minimum payments every month and pay off the remaining balance before the end of the introductory period, you will not pay for any interest.
For example, Wells Fargo Platinum card offers 0% Introductory APR for 18 billing cycles for purchases. If you use the card to make a purchase of $10,000, you can pay the monthly minimum payment for 18 months, which is usually around 1% of the account balance, and then pay off the remaining balance at the end of 18 billing cycles without incurring any interest fees.
4. Use balance transfers to minimize interest charges
Credit cards with 0% introductory APR on balance transfers can help you save money by allowing you to transfer high-interest balances to a 0 interest credit card to eliminate or minimize interest charges. For example, if you have $10,000 in credit card debt and are paying an interest rate of 20%, transferring balances to a 0% APR credit card for 18 months, such as Wells Fargo Platinum card, can provide substantial savings. You can save around $3,000 on interest charges over the next 18 months. If you are carrying a credit card balance each month, it is well worth your time and effort to apply for a credit card offering 0% intro APR on balance transfers.
5. Free membership of Global Entry and TSA Pre✓
For frequent flyers, getting stuck in the airport security lines means the unnecessary long wait. Sometimes the delay causes travelers to miss flights or connections. In such situations, the travelers have to change flight ticket and may need to stay in a nearby hotel overnight if the flight is scheduled for the next day.
The airport expedited screening programs of TSA Pre✓ and Global Entry can save travelers 20 to 30 minutes in most airports, which help you avoid the situation of missing flights. TSA Pre✓ provides expedited security screening benefits for flights departing from U.S. airports. Global Entry provides the TSA Pre✓ benefit plus expedited US customs screening for international air travelers when entering the United States. TSA Pre✓ costs $85 and Global Entry costs $100 for a five year membership.
6. Free checked bags
Many airlines charge $25 or $30 per bag on each leg, which means an additional cost of $50 or $60 per passenger on a round trip. The cost of baggage fees can add up quickly for a large travel group. Some airline credit cards let you check your first bag for free.
7. Free access to airport lounges
Whether you are a business traveler or an avid vacationer, having unlimited lounge access to VIP airport lounges will be a pleasant experience when you and your companions can enjoy a light meal, sip wine, and relax in comfortable chairs in an exclusive club. Some travel credit cards offer a complimentary Priority Pass Select membership, which is a prestigious membership program for travelers to visit airport VIP lounges. For example, Mastercard® Gold Card and The Hilton Honors American Express Business Card offer complimentary Priority Pass Select membership, which is an instant savings of a few hundred dollars in value annually.
8. Free in-flight food, drinks, and WIFI
Some credit cards give you airline credit of $100 or $200 annually to pay for airline incidentals, such as in-flight drinks, refreshments and WIFI access. For example, Mastercard® Gold Card offers $200 annual airline credit. Bank of America® Premium Rewards® credit card offers $100 annual airline credit.
9. Complimentary elite status of hotel membership
Hotel cards may offer complimentary elite status of hotel membership, which can be used to save you on a number of hotel amenities, such as complimentary breakfast, room upgrade, award nights, etc. You can also earn extra rewards points which can be redeemed for free hotel nights or merchandises. For example, The Hilton Honors American Express Business Card offers complimentary Gold Status of Hilton Honors membership, and Marriott Bonvoy Business™ American Express® Card offers complimentary Marriott Bonvoy Silver Elite status.
10. Complimentary concierge services
Personal concierge services provide errand management and information research for private clients. Services include informational requests, making travel arrangements, booking tickets to special events or concerts, setting dinner reservations, making telephone calls, and more. The cost of using an independent personal concierge company can be quite expensive. A few premium credit cards offer complimentary concierge services. For example, Mastercard® Gold Card, Mastercard® Titanium Card, and Mastercard® Titanium Card provide their cardholders with complimentary Luxury Card Concierge.
11. Complimentary car rental insurance
When you rent a card, you may need to buy car rental insurance. Buying such insurance services from the rental car company will add extra cost to your car rentals. Many credit cards offer complimentary insurance against damage to or theft of your rental cars. It will save you money on car rentals. For example, Avianca Vida Visa® Card offers auto rental collision damage waiver as a complimentary service to its cardholders.
12. Save on the cost of foreign currency exchange
When you are traveling abroad, withdrawing cash from local ATMs and converting currency can cost extra. Many credit cards let you pay no foreign transaction fees for your purchases in foreign countries. For example, Capital One credit cards do not charge foreign transaction fees. In addition, some travel credit cards do not charge such fees either, such as Bank of America® Travel Rewards credit card, Bank of America® Premium Rewards® credit card. Wwhen you travel abroad, it is always a good idea to carry a credit card with no foreign transaction fees because it saves you money on purchases and it helps you avoid the hassle of converting currency.
13. Discounts on companion airfare
Some airline credit cards let you buy companion flight tickets at a discount, which saves you money on airfare if you fly with a companion. Alaska Airlines Visa® Business credit card offers its cardholders Alaska Companion Fare from $121 ($99 plus taxes and fees from $22) every year. Each year on your account anniversary, you will get a companion fare from $121, which is valid on all Alaska flights booked on alaskaair.com with no blackout dates.
14. Complimentary extended warranties
In-store extended warranties may cost too much and you may never have a chance to use the coverage. You are often better off declining to pay for such extended warranties because it can be a waste of money. Luckily, many credit cards offer extended warranty at no cost for their card members.
15. Complimentary price protection
Price protection is another common benefit provided by credit cards. If your purchase goes on sale after you buy, some credit cards may refund the difference. You just need to provide an ad proving the better price and submit the claim within the specified time limit of the price change.
16. Improve credit score and save on loans
Having a higher credit score can lower your costs on other loans, such as home mortgage, car loans, etc. Your credit-card payment activities affect your credit score. If you make payments on time to pay towards the balance on your credit card accounts, your responsible payments will improve your credit score. Having an excellent credit rating may qualify you for loans with lower interest rates, which will potentially save you thousands of dollars each year. If you have poor credit or have insufficient credit history, you may be ineligible for loans. Opening credit card accounts and making payments responsibly can be a good first step to establish credit history so that you can save a lot on loans. Sometimes you may have to start with secured credit cards to build credit, which may have low credit limit and may cost a little, but having an established credit history of good ratings will pay off over the long term.
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