Credit cards can do you a lot of good, and even put more money in your pocket.
- Credit cards are often considered a dangerous financial tool.
- In reality, there is much to be gained financially by charging expenses to a credit card.
You’ll often hear that it’s important to proceed with caution when using credit cards. And there is definitely some truth to that.
Some people build up credit card balances when emergencies arise and unplanned expenses arise. But others build up balances by spending too much on credit cards. And carrying a balance could mean losing a lot of money in interest over time.
While it’s true that credit cards can make you lose money, they can also make you money. Here are a couple of ways you can see your savings grow thanks to your credit cards.
1. You can get cash back on your purchases
The beauty of credit cards is that they reward you for purchases you were already planning to make. The groceries you buy each week? That could translate to some serious cash back (especially these days, with food costs so high). Those weekly gas station fill-ups? Those could also put cash in your pocket.
Better yet, many credit cards offer cash bonuses in specific categories. While you can usually get 1% cash back on your purchases, you may be eligible for 3% cash back at the pump. In fact, it’s a good idea to coordinate the use of your credit card to take advantage of opportunities like that.
2. You can get a registration bonus
Many credit cards offer sign-up bonuses that put a lot of cash in your pocket for spending a certain amount of money within a few months of opening a new account. If you have larger purchases coming up, it’s worth checking out what deals are out there.
Imagine you’ve been saving money to furnish the house you bought last year, and you intend to spend about $3,000 on a dining room set and some sofas for your living room. If you find a credit card offer for a $250 signup bonus for spending $3,000 within three months of opening your account, it should be a pretty easy offer to snag.
Even if you don’t have a major purchase on the horizon, you can still claim a sign-up bonus with a lower spending threshold. There may be a card, for example, that gives you $200 cash back for spending $1,000 within three months of opening your account. If you normally collect daily bills like gas and groceries, you might easily hit that threshold.
Get ready to see your bank account grow
Credit cards definitely have the potential to cost you money. But if you make sure you don’t carry a balance, then they can actually do the opposite: make you money.
It pays to sign up for credit cards with generous rewards programs so you can get extra cash back on purchases you make on a regular basis. It’s also worth looking into sign-up bonuses when the circumstances are right, like when you’ve got a big purchase on your radar or manage to find a deal with a low spending requirement.
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