Saturday, February 22, 2014

Credit Cards Cash Back and Reward Points Benefits

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Credit Cards can help you save money


Many of us use credit cards to make payments, but few realise that they can also be used to save money. Using the cards on the basis of the benefits they offer and some smart tips can help individuals save money.


Use credit cards wisely after understanding the terms of use. Choose the right credit card on the basis of your needs to save money.

 
Spend On Credit Card and Earn Moeny


Utility bills, insurance premium are some of the mandatory payments that an individual makes at regular intervals. Make these payments using credit cards. This has twin benefits, either you get cash back or you get reward points when you make these payments and your credit limit gets blocked to that extent leading to less scope for discretionary spends and resultant overspending.


Credit card offering cash back can be a good money-saving tool. For example, there are credit cards that offer 5-25% cash back on certain spending, such as utility bills payments, movie ticket purchases, restaurant bills. Some cash-back programmes are ongoing and some are limited time offerings.


If you pay . 1,000 towards electricity bills, the statement shows a debit entry of . 1,000 and a credit entry of . 50, effectively asking customer to pay . 950. Some banks charge the customer for . 1,000 and show . 50 as ‘cash back earned’ and customers can ask the bank to adjust such cash back earned against outstanding for the next month. Some times banks or card issuing entities tie up with certain retail chains or online shopping sites for some cash back arrangements for limited time period, say a month for an event, say end of season sale. Banks generally inform their customers through SMS and email about such offers. Keep a track of these deals and save money. Never forget that most banks limit maximum cashback payable on each card so know the sub-limits.


Also, do not go overboard just because there is some offer is going on. The most important thing is to pay your bills by the due date. You need to be careful of ensuring that you pay back the amount in full, otherwise you would loose the amount saved through high interest rate, which you would be servicing on these cards.


Earn Reward Points


Before thinking of redeeming your reward point, spend some time on reward catalogue kept on the bank website. You can also decide what you want in advance and, accordingly, plan redemption of reward points when you accumulate enough. Reward points can fetch you a wide range of options, from a gift voucher to a car, from a hot balloon ride to charity to needy. While many spend hours studying the saving opportunities, many falter on timely payments, which can be avoided using technology wisely.


Pay Due Amount on Time


Do issue a standing instruction on your bank account to pay off your credit card outstanding in full and keep adequate balances in your bank account. This ensures that you always pay your dues on time. You not only avoid interest and late payment fees, but also improve your CIBIL score, which in turn makes you a preferred customer when you need credit in future.

 

 

 

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