7 ways to save (and earn) cash with credit cards

In a financial crisis, it's more important than ever to ensure that you pay no more than is necessary with your credit cards. Even better if you can earn some cash from them. In this article, we outline 7 ways you can save, and even make some cash using credit cards. To know the benefits and traps of credit card usage, you must first understand the advantages and disadvantages of compounding. Compounding can work for or against you.

But before we get credit cards to work for us, there are some tips to follow in order to save cash from credit cards instead loosing more money. First of all, and the most obvious, avoid late charges. If you can't pay up on time, you lose. Secondly, never use a credit card to take money out of a cashpoint. You will be slapped with higher interest rates. credit cards can be an expensive way to borrow money.

Thirdly, pay up in full. Avoid paying minimum repayment. Here compounding will work against you. Its better that you cut up your credit cards if you're struggling with large outstanding debt. Of course, there may be other pitfalls not mentioned in using credit cards, but these 3 are the most common. But once you get these pitfalls out of the way, then you can get compounding to work for you.

Onto the fourth point: use a cashback card. Half of all credit card holders actually pay off in full each month. They should sign up for a cashback card, so they can earn up to 5pc money back on all spending. Some cashback cards can pay between 5pc to 10 pc.

Next, use credit cards tht offer free annual subscriptions and change them the moment their free annual subscription expires. There are many credit cards out there offering free or waived annual subscription fees, so instead of carrying half a dozen credit cards around, just use one or two and change them when their time is up.

Six, look out for free borrowing. There are still several 0pc deals around. To boost spending, some retail stores are offering 0pc interest rate for 6 to 12 months.

Last but not least, use a credit card that give you the best reward points. Some of these points can be exchanged for cash, cash vouchers, or household items that you need, eg. gas and groceries.

Today's Bottom Line

Compounding will work for or against you. Its up to you how you want it to work.

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