Continuing with my Make Money With Australian Banks series today I am tackling credit cards. This post is not for those who are bad at managing their money or who have no self-discipline. If can manage your money well then you can use a credit card to make money. If you spend all your money or would max out your credit card you should look for interest free or low interest offers to help you pay off the card, get used to working with a budget and managing your money. Once you can do that, you can do what I suggest here.
A credit card if used wisely can be good. The key is using it wisely. So how can a credit card help you financially?
Save interest on your mortgage
By placing all your money in your offset account and making any necessary purchases on your credit card you will save interest on your mortgage. All you need to do when they time comes to pay your credit card bill is transfer the money to pay the bill. You usually get 55 days interest free with credit cards. That means 55 days of your money reducing the interest payable on your mortgage.
Earn interest in a high savings account
If you don’t have a mortgage you can do the same thing with a saving account. Place all your money in a high interest savings account (one that doesn’t penalize you for making withdrawals), then pay your bill when the time comes. Essentially what you are doing is earning interest on money you have borrowed from the bank for 55 days.
Collect reward points
If you are going to use a credit card you may as well get one with a rewards scheme attached. These vary from offering cash back and gift cards right through to frequent flyer points and hotel accommodation.
Research what it is you would use the points for the most, then set about making all your purchases on your credit card to accrue points to put towards Christmas expenses or a holiday.
Use insurance bonuses
Insurance for car rental, discounted travel insurance and price protection insurance are just some of the bonuses many credit cards offer. Check out what bonuses your credit card includes then use them. There is no point paying for extra car rental insurance if your credit card has this as one of its features for free. By using the features on your credit card you can save hundreds of dollars a year.
Remember, using a credit card wisely is a great way to make and save money but this option is only as good as you are. If you are not disciplined or do not have a handle on your money or easily get swayed by the desire to ‘accrue more points’ then a credit card and these options are not right for you.
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