Credit Cards and You: Getting the Most from Your Credit Card

Tips to Help You Save Money

There are lots of ways to get the best value from your credit card and avoid situations that might cost you money.

Ask questions

If you're puzzled about some aspect of your credit card, ask your credit card issuer about it. Their answer may help you make better financial choices.

Don't base your credit card choice on just one factor

Low introductory rates or reward programs may not be what you really need. Look for the package that best suits your overall financial situation.

If possible, pay your balance in full each month

If you can't, transfer the balance to a form of credit with a lower annual interest rate, such as a line of credit. If you do this every month, you'll always benefit from the grace period on your credit card. In your monthly budget, include the amount needed to pay off your outstanding balance as quickly as possible.

Make early payments between statements

If you carry a balance on a credit card, interest is normally charged from the date you make a purchase until you pay it in full. Making an early payment will save you interest charges. For more information on how to save money by paying your bills early, see Managing Your Money: How to Save with a Credit Card.

Take cash advances only when absolutely necessary

Use cash advances for short-term or emergency situations only. That's because interest on advances is charged from the time you borrow until the time you pay the advance in full. In addition, there are usually service fees associated with a cash advance. If you must take a cash advance, make a payment to your credit issuer as soon as possible. This will avoid daily interest charges, which add up in a hurry.

Allow time for your payment to reach your credit card company

If you don't, you may end up making a late payment that could affect whether the interest-free period applies to your new purchases, and could also negatively affect your credit history. For more information on the effects of late payments, see Managing Your Money: How to Save with a Credit Card.

Take advantage of pre-authorized payments

Consider making your monthly credit card payments automatically from your bank account to ensure that your payments are never late. But remember to keep track of these payments so that your account always has enough money to cover them. For more information on pre-authorized payments, see Managing Your Money: How to Save with a Credit Card.

Read your statements and other mailings from your credit card company carefully

This way you'll always be up to date about any fee increases or rule changes.